Delayed Due to COVID-19... Job Opportunities in Daegu, Gumi, and Miryang Also 'Stalled'

Direct Impact of COVID-19 on Daegu Delays
Gumi's Construction Start Uncertain
Special Balanced Development Act's 'Employment of 10 or More' Rule
Miryang Participating Companies Withdraw, Causing Contraction

[Asia Economy Reporter Moon Chaeseok] Concerns are rising that the win-win job projects promoted not only in Gwangju but also in Daegu, Gumi, and Miryang may shrink as the Federation of Korean Trade Unions (FKTU) declared its withdrawal from the 'Gwangju-type job,' the nation's first labor-management win-win job model. In fact, some regional win-win job projects are reported to be at a standstill.

According to the government and local governments on the 8th, due to the impact of COVID-19 and other factors, the scale of the win-win job projects announced by each local government has been reduced or the completion schedule delayed.

After signing an investment agreement with LG Chem on July 25 last year, Gumi City began discussions on investment incentives and implementation schedules from the second half of that year, aiming for 'product production in 2023.' Gumi City initially planned, in consultation with LG Chem, to start construction this year on a 60,000-ton capacity secondary battery cathode material plant, complete it in the second half of 2022, and begin production in 2023. However, even the start of construction this year is uncertain. The biggest reason cited by the local government is COVID-19. A Gyeongbuk Provincial Office official said, "All administrative efforts are focused on COVID-19 response, so we have not been able to hold discussions with Gumi City officials regarding the win-win jobs," adding, "Meetings held by the Labor-Management Development Foundation and central government ministries have all been canceled." The Gyeongbuk Provincial Office expects that the project can be properly promoted at least in the second half of the year.

The situation in Daegu, which was hit hard by COVID-19, is reported to be similar. On June 26 last year, Daegu City signed a future-type job labor-management-government win-win agreement between auto parts company Irae AMS (formerly Korea Delphi) and its partner companies, planning to create 1,200 new jobs by 2025. This was to be achieved through funding work amounting to about 225 billion KRW. According to the government, Irae AMS intended to clear existing secured loans through refinancing and then secure loans using real estate assets of Irae AMS and its parent company Irae CS as collateral. KDB Industrial Bank, Hana Bank, and DGB Daegu Bank planned to provide 225.8 billion KRW in support to Irae AMS. Regarding this, a Daegu City official said, "Unlike other regions such as Gumi and Gwangju, there are no special ongoing efforts for win-win jobs in Daegu," adding, "All efforts are focused on COVID-19 response."

Some regions face the risk of project scale shrinking. Miryang City signed an agreement on June 24 last year with 30 foundries and other root companies in the Machun Foundry Complex in Changwon, planning to invest 350 billion KRW by 2024 to create 500 new jobs. However, this plan is at risk of being reduced due to the Special Act on Balanced National Development (the Balanced Development Act), which came into effect on the 5th. The Balanced Development Act was established for regional win-win job projects. To receive financial and fiscal support from the government under this law, it must be proven within three years of the project start date that at least 10 jobs and 1 billion KRW in investment will be created. It is reported that some companies participating in the Miryang-type job project do not meet these conditions. A Gyeongnam Provincial Office official explained, "We confirmed that some companies have issues regarding the 'job creation (employment of 10 or more)' requirement under the Balanced Development Act," adding, "If companies that find it difficult to hire 10 or more employees drop out, the project scale will inevitably shrink."

According to the enforcement decree of the Balanced Development Act, seven local governments conducting win-win job projects?Gwangju, Daegu, Gumi, Miryang, Hoengseong, Gunsan, and Busan?can receive official support after on-site inspections and feasibility evaluations by the Ministry of Trade, Industry and Energy. An official from the Ministry of Trade, Industry and Energy said, "Support standards in the notice, labor-management win-win agreements, and project feasibility must all be met," adding, "Once the enforcement decree of the Balanced Development Act is applied, support procedures and standards will be disclosed, making government support targets clearer and making it easier for local governments and companies to prepare."

This content was produced with the assistance of AI translation services.