The Promise of 800 Trillion Won, and the Cold Reality
In December 2025, the South Korean business world was heated up by the ‘800 Trillion Won Investment Declaration’ of the four major groups: Samsung, SK, Hyundai Motor, and LG. These groups unveiled a blueprint to pour an astronomical sum of 800 trillion won into the domestic market over the next five years to foster advanced strategic industries such as semiconductors, electric vehicles, batteries, and biotechnology.
This is assessed as the largest investment plan in history and a ‘winning move’ for Korean companies to survive amidst global supply chain crises and the US-China hegemonic competition. The government immediately issued a welcoming statement, saying “a foothold for an economic rebound has been prepared,” and major media outlets are pouring out rosy prospects, expecting a ‘Second Miracle on the Han River.’
However, unlike this festive atmosphere, the expressions of citizens walking the streets remain dark. This is because the economic temperature felt by the public remains freezing.
A ‘League of Their Own’ Focused on High-Tech Industries
When dissecting the investment plans of the four major groups, the content is thoroughly tailored to ‘future sustenance’ and ‘super-gap technology.’
Samsung plans to invest over 300 trillion won in creating the Yongin semiconductor cluster and in system semiconductors and bio sectors to solidify its status as a ‘semiconductor superpower.’ Hyundai Motor is finalizing an EV-dedicated factory in Ulsan and accelerating the development of Software Defined Vehicles (SDV) to secure its place in the global top 3. SK and LG have also staked their survival on securing new growth engines such as batteries, AI, and eco-friendly materials.
While this investment is undoubtedly necessary for national competitiveness, the dominant analysis is that the immediate job creation effect will be limited because it is biased toward high-tech industries with high automation rates rather than traditional manufacturing which has a large employment induction effect. This is why criticisms of “investment without employment” and “a league of their own” are emerging.
Three Consecutive Years of 2% Low Growth, Solidified ‘L-shaped’ Recession
In contrast to the flashy investment announcements, the fundamental stamina of the Korean economy is rapidly deteriorating. The Bank of Korea lowered its economic growth forecast for 2025 to 2.1%, lower than initially expected. With this, the Korean economy has been unable to escape the swamp of low growth in the 2% range (or lower) for three consecutive years since 2023.
Warning sounds are being heard that the potential growth rate is at risk of falling to the 1% range. Exports are showing instability, fluctuating in reliance on the semiconductor cycle, while domestic demand is frozen solid due to the burden of household debt and high inflation.
The retail sales index has recorded negative figures for 10 consecutive months, making the consumption cliff a reality, and the closure rate of self-employed businesses is renewing record highs. While large corporations discuss record-breaking performance, screams that “it’s harder than the IMF crisis” are bursting out in alleyway commercial districts, deepening a bizarre polarization.
The Disappearance of the Trickle-Down Effect: The Broken Link
In the past high-growth period, the ‘trickle-down effect,’ where money flowed to subcontractors and workers when large corporations made money through exports, worked.
However, as of 2025, this link is effectively broken. To maintain global competitiveness, large corporations are increasing the proportion of overseas local production rather than domestic, and even domestic investments are focused on automated facilities utilizing robots and AI.
As a result, ‘growth without employment’ and ‘growth alone,’ where the growth of large corporations does not lead to increased sales for SMEs or increased household income, have become entrenched. The reality that despite the announcement of 800 trillion won in investment, quality jobs for young people are still scarce and wages for SME workers are stagnant proves this.
The Economy of Common People Swept Away by the ‘Three Highs’
It is not just low growth that is squeezing the lives of ordinary people. The ‘Three Highs’ phenomenon of high prices, high interest rates, and high exchange rates is thinning the wallets of ordinary people and sitting them on a pile of debt.
According to Statistics Korea, the consumer price inflation rate rarely comes down from the mid-3% range, and the perceived cost of living is much higher as living prices such as groceries and utility bills have skyrocketed. As food prices soar, the neologism ‘Lunchflation (Lunch + Inflation)’ has become a daily reality, and the sighs of housewives grocery shopping at marts only deepen.
Lives Sustained by Debt, Household Debt Reaching the Limit
As the high-interest trend continues for a long time, ‘Young-kkeul’ (pulling one’s soul to get a loan) investors and the self-employed are being driven to the edge of a cliff. Mortgage interest rates fluctuate between 6-7% per annum, leading to a surge of ‘house poor’ people who spend more than half of their monthly salary paying off interest.
Korea’s household debt ratio exceeds 100% of GDP, the highest level in the world, and this is becoming the main culprit eating away at consumption capacity. A bigger problem is the possibility of self-employed loans going bad. If self-employed people who have held on with debt since COVID-19 cannot withstand the end of the repayment deferral and the shock of high interest rates and go bankrupt en masse, it is a ‘time bomb’ that could spread to a crisis of the entire financial system.
The Counterattack of the Exchange Rate: Do Only Export Giants Smile?
The high exchange rate phenomenon (weak won), where the won-dollar exchange rate fluctuates around the 1,400 won range, is also a double-edged sword. Typically, a rise in the exchange rate has the effect of increasing profits by enhancing the price competitiveness of export companies, but it brings the pain of rising prices to domestic demand companies and ordinary people by raising the price of imported raw materials.
In the past, the benefits of rising exchange rates spread throughout the economy, but now it has become a structure where only export giants enjoy exchange gains and the cost is paid by the entire public. This is why complaints arise: “They say large corporations made record profits due to the exchange rate effect, but we can’t sleep because of worries about gas and food prices.”
Who Benefits from Tax Cuts?
To revitalize investment, the government is providing unconventional tax credit benefits to large corporations. Through the ‘K-Chips Act’ and others, taxes are cut by up to 25% for semiconductor facility investments, but the resulting tax revenue shortfall is bound to be filled by tax increases for ordinary people or reductions in welfare.
Civic groups criticize, saying, “If benefits from tax cuts for chaebols do not lead to investment and employment, it is merely preferential treatment.” There are high voices calling for mandatory job creation or win-win cooperation as conditions for tax benefits.
Deepening Polarization: The Shadow of ‘K-Shaped’ Recovery
The most painful reality of the Korean economy in 2025 is that polarization of income and assets is becoming extreme.
In the process of economic recovery after the COVID-19 pandemic, the ‘K-shaped’ polarization, where high-income earners and large corporations become richer while low-income earners and SMEs become poorer, has become distinct. According to the Household Income and Expenditure Survey by Statistics Korea, the quintile share ratio, which indicates the gap between the top 20% and bottom 20% of income, continues to widen.
The Collapse of the Social Mobility Ladder Born of Asset Inequality
More serious than the income gap is the asset gap. In the process of fluctuations in asset prices such as real estate and stocks, the ‘haves’ have increased their wealth, but the ‘have-nots’ have fallen into the abyss of poverty beyond relative deprivation.
Young people are falling into despair, saying, “I can’t buy a house in my lifetime just by saving my salary,” and this leads directly to the low birth rate problem of giving up marriage and childbirth. In a society where the ladder of class mobility has been kicked away, the grand number of 800 trillion won investment looks just like a “party for those born with silver spoons.” The self-deprecating joke “Having good parents is also a skill” represents the sad reality of Korean youth in 2025.
Crisis of SMEs and Collapse of Industrial Ecosystem
The gap between large corporations and SMEs is also widening to an irreversible level. When large corporations shout about 800 trillion won investments, SMEs are worrying about survival, suffering from the triple whammy of rising raw material prices, labor cost burdens, and recruitment difficulties.
In particular, there is constant criticism that large corporations are passive in introducing the delivery unit price indexation system or are still continuing unfair practices such as technology theft. If SMEs, which should act as a sturdy waist, collapse, the entire industrial ecosystem is threatened. Experts emphasize the urgency of creating a mutually beneficial cooperation ecosystem, saying, “We cannot guarantee the sustainability of the Korean economy if large corporations do well alone.”
Regional Imbalance and the Metropolitan Black Hole
As investments by the four major groups are concentrated mostly in the metropolitan area or nearby regions, the crisis of local extinction is accelerating further.
As large-scale investments such as the Yongin Semiconductor Cluster are concentrated in the metropolitan area, the ‘metropolitan black hole’ phenomenon of talent, capital, and infrastructure is deepening. Local industrial complexes are becoming empty, and young people are flocking to Seoul in search of jobs. This not only damages the constitutional value of balanced national development but also breeds inefficiency by simultaneously increasing the cost of overcrowding in the metropolitan area and the cost of extinction in the regions. Without fostering regional specialized industries and bold decentralization, there is no future for the Korean economy.
Job Shock: AI and Robots Are Coming
Behind this 800 trillion investment lies the shadow of ‘The End of Employment.’ AI and robot technologies that companies are rushing to introduce dramatically increase productivity, but at the same time, they are rapidly replacing human jobs.
The Paradox of Automation: Productivity Increases, Employment Decreases
With the spread of smart factories, the scenery of factories running only with machines while people disappear is increasing. Hyundai Motor’s new EV factory has a robot automation rate reaching 90%, and employment is expected to decrease to less than half compared to past internal combustion engine car factories.
At bank counters, AI tellers welcome customers, and in convenience stores and restaurants, kiosks and serving robots have replaced humans. This threatens not only simple labor jobs but also office and professional jobs. Companies argue it is an “inevitable choice in an era of population decline,” but for workers, it is a crisis of survival.
Lack of Quality Jobs and Youth Unemployment
Jobs at large corporations favored by young people are decreasing, and unstable jobs such as short-term contracts or platform labor are filling that space. Job seekers scream, “No matter how much I build up my specs, there is no door to enter.” On the other hand, SMEs cry out, “We can’t run the factory because we can’t find people.”
This job mismatch phenomenon is a structural problem of our labor market. For the 800 trillion investment not to end as an investment without employment, improvement of the dual structure of the labor market must precede along with talent nurturing in new industry fields.
The Urgency of Education Reform
Education reform to cultivate talents suitable for future industrial demands is also urgent. We must move away from uniform rote learning education to education that fosters creativity and problem-solving skills.
Barriers between university majors must be broken down, and the lifelong education system must be strengthened to support everyone in adapting to the changing technological environment. Otherwise, Korea may be a ‘technologically advanced country’ but fall to a ‘talent underdeveloped country.‘
What Must Be Done: Beyond Numbers to People
For the 800 trillion won investment to become a true ‘economic revival,’ we must switch the paradigm of policy so that the warmth can spread to ordinary households and SMEs, the peripheral nerves of the economy, rather than being intoxicated by the flashiness of numbers. The government should not just go all-in on tax cuts or deregulation for large corporations, but concentrate fiscal capacity on strengthening the social safety net and resolving polarization.
Transition to ‘Inclusive Growth’
Economic policies relying on the trickle-down effect have already expired. Now is the time to contemplate a virtuous cycle structure of ‘income-led growth’ (or inclusive growth) where household income is increased to boost consumption, which in turn leads to corporate investment.
Policies to increase the labor income share, such as rational increases in the minimum wage, improvement of treatment for non-regular workers, and expansion of earned income tax credits, must be implemented in parallel. Also, ‘economic democratization’ measures to establish a fair trade order between large and small companies and strengthen incentives for employment-inducing investments are essential so that the investments of the 4 major groups lead to the creation of quality jobs.
Investment for Future Generations: Education and Welfare
In the long term, the education system must be reformed and vocational training programs strengthened to respond to job changes due to technological innovation. Only when education that fosters unique human capabilities that AI and robots cannot replace, and a social safety net that allows one to stand up again even after failure are equipped, can young people challenge themselves without fear.
If even a part of the 800 trillion won is used for investment in human capital and expansion of social infrastructure, that would be the most certain investment for the future.
Dreaming of an Economy Where We Live Together
In the winter of 2025, two report cards lie before us. One is the flashy blueprint of ‘800 trillion won investment,’ and the other is the shabby reality of ‘39.8% elderly poverty rate’ and ‘record-breaking self-employed closures.’
A true advanced country is not determined by GDP numbers or sales figures of large corporations, but by whether the poorest and most marginalized neighbors can enjoy a humane life. For the 800 trillion won investment to become hope for all citizens rather than a feast for a few, the wisdom to balance ‘growth’ and ‘distribution’ is more urgent than ever. If we cannot overcome this irony where the numbers are huge but life is impoverished, the spring of the Korean economy will be far off.
