High Squid Prices Test South Korea’s Politicians

As he sells his squid at the Jagalchi fish market in the southern port of Busan, Chang Ho-bin is happy to explain why he will be voting against South Korea’s ruling party in Wednesday’s parliamentary elections.

Martin Child | Photodisc | Getty Images

The 33-year-old fishmonger says the government has promoted policies that have helped big companies such as Samsung but driven up living costs for ordinary consumers who cannot afford to buy his squid, which costs Won45,000 ($40) a box, more than double its price from two years ago.

“President Lee Myung-bak and the ruling conservatives did not manage the economy properly,” he grumbles as a woman nearby returns an escaping red octopus to its bucket. “They supported big conglomerates but forgot small business. Prices have got too high for people on lower incomes.”

Jagalchi market – a seemingly endless sprawl of tubs of spider crabs and eels – should be a bastion of the ruling conservatives who regard the south-east as their home territory. But while many fishmongers vowed to back the ruling party out of loyalty, an equal number felt it was betraying smaller companies such as fishmongers, fishermen and other seafood businesses that depend on them.

The complaints reflect South Korea’s broader national problems. Faced with increasing competition from China, Seoul faces a conundrum in trying to reform inefficient small and medium-sized enterprises, which provide 90 per cent of the country’s jobs, without sparking higher unemployment which officially stands at about 4 per cent.

The government says it is shaking up the sector, partly through tariff-slicing trade deals that will bring in cheaper imports. But it is simultaneously trying to stop thousands of SMEs from collapsing with measures that would, for example, protect traditional markets such as Jagalchi from supermarkets. Still, small businessmen say the protections need to go further.

Wednesday’s parliamentary elections, which will determine the composition of the 300-seat national assembly for the next four years, will set the tone for December’s presidential election. They have long been expected to reveal frustration with Mr Lee’s party but many South Koreans also have little faith in the main leftwing opposition Democratic United party to deliver on its promises of deeper welfare.

Crucially, the conservatives – whom Korea’s notoriously inaccurate polls suggest lead by a whisker – are resisting the opposition’s moves to expand welfare because of fiscal concerns. But economists say an improved safety net would help soak up the job losses from reforming the SME sector.

In the election, rising food costs have become a core battleground. While prices of many fish have risen 20 to 30 per cent in the last year, squid – a Korean favorite – has spiked even more. Puffing a cigarette under the ship’s lanterns that lure the squid to the surface, Park Heung-mo, 58, says it was getting harder to fill his trawler’s hold.

“Off the Russian coast, there are more and more Chinese competing for squid. In the past, we would need 50 days out at sea, now we need 70,” he says.

Once Mr Park has landed his catch, the squid enter a tangled supply chain that inflates the price of much food in Korea, so many stallholders now prefer to buy imports. The fishmongers say their margins are under pressure from both rising fish costs and growing competition from supermarkets.

Throughout Jagalchi there is a prevailing sense that SMEs are floundering even with tepid government protection. Han Chung-jin, an eel salesman, says his main business came from SMEs around Busan that would regularly celebrate deals or have team-bonding sessions with eel dinners.

“The economy’s not doing well. Local businesses just aren’t having their high-stamina eel dinners any more,” the 65-year-old complains.

Lee Chun-soo, another fishmonger, agrees that welfare is the biggest issue in Korea because of the rapidly aging society. But he says he would stick with the ruling conservatives as he could not believe the promises of the opposition Democratic United party. Indeed, the Hyundai Economic Research Institute, a think-tank, found that 91 per cent of people disbelieved politicians’ welfare promises.

Disbelief in mainstream politicians is widespread at Jagalchi. Several people say they would back politicians from outside the two main parties. Mr Park, the squid trawlerman, says all politicians’ welfare promises simply meant higher taxes. He was relieved he would miss the vote.

“I’ll be at sea,” he says merrily, flicking his cigarette into the harbor.