Private Education Industry Plunges For First Time Since 1998

The educational service industry has ranked first in the red ink growth ratio for the past four years because of the continuing economy recession.

Among educational industries, the growth rate of the private education field such as the cram schools and supplementary academies have also dwindled for first time in the recent five years as the parents of students are even reducing their expenditure for education due to the grim realities of life.

According to the Korea Bank on May 24, over the first quarter of this year, from January to March, 2003, the net gross product of the educational service industry among the gross domestic product shrunk seven trillion and 316.9 billion won, showing a one percentage point decrease from that of the fourth quarter of last year, seven trillion and 388.3 billion won.

The reduction of the gross product of educational service industry has been the first time this has happened since the first quarter of 2000’s minus 0.6 percent point decrease. Although the gross product of the educational service industry dwindled from the fourth quarter of 1999’s six trillion and 390 billion won down to the first quarter of 2000’s six trillion and 351 billion won, it has continuously expanded until the fourth quarter of 2003.

In addition, the private educational industry that includes the cram and supplementary schools slowed a 1.8 percent point drop from that of the same period last year, recording the first reduction after five years and three months since the fourth quarter of 1998’s minus 11.5 percent point drop when the financial crisis reached its zenith.

As of the first quarter of this year, the gross product of the private educational industry has shown, in contrast to that of the same period last year, 2.7 percent, 17 percent, 5.9 percent, and 12.4 percent point increases from 1999 to 2002 respectively. The private educational industry that recorded a skyrocketing tendency of increase over last year, such as 10.8 percent in first and 13.0 percent increases in the second quarter, slowed down to 3.7 percent and 5.6 percent increases in the third and fourth quarters of 2003 respectively.

“The protracted recession of economy is the biggest factor that has badly influenced the educational service industry,” remarked the deputy chief of the GDP team of the Korea Bank, Park Jin-wook, adding “Because the numbers of economically-depressed families are increasing and students’ applications to cram schools are dwindling facing the Educational Broadcasting System’s television lectures for the university entrance exam, which were started in April, the status of private educational industry was aggravated more.”

Joong-Hyun Park sanjuck@donga.com