"'Manufacturing Powerhouse' Declared, but Domestic Employment Declines... Lost as Many Jobs as Samsung Electronics and Hyundai Motor Combined"

Federation of Korean Industries Analyzes Domestic Manufacturing Employment and Overseas Subsidiary Local Employment Trends Over the Past 5 Years
Decrease of 180,000 Compared to Previous Period... Samsung Electronics + Hyundai Motor Domestic Employee Numbers as of 2020

[Asia Economy Reporter Kim Heung-soon] An analysis has revealed that domestic employment in South Korea's manufacturing sector has decreased by approximately 180,000 over the past five years compared to previous periods. This scale is comparable to the combined number of domestic employees at Samsung Electronics and Hyundai Motor. Meanwhile, the proportion of overseas employment in manufacturing has significantly increased, intensifying the issue of job outflow, and South Korea's share in global manufacturing production has declined, raising concerns about the weakening status of the country as a "manufacturing powerhouse."

The Federation of Korean Industries (FKI) announced on the 24th that this conclusion was drawn from a comparative analysis of manufacturing employment and production landscapes over the recent five years (2015?2019) among the world's six major manufacturing countries: China, the United States, Japan, Germany, South Korea, and India.

Number of Domestic Manufacturing Employees in 2019 Compared to 2015
Decrease in South Korea, Increase in the U.S., Japan, and Germany

According to statistics from the International Labour Organization (ILO), the number of manufacturing employees in Japan, Germany, and the United States increased by 3.3% (340,000), 3.3% (250,000), and 3.1% (490,000) respectively from 2015 to 2019, whereas South Korea experienced a 3.9% (180,000) decrease. During this period, the reduction in South Korea's manufacturing employment was roughly equivalent to the combined number of employees at Samsung Electronics (109,490) and Hyundai Motor (72,020) as of 2020.

South Korea's manufacturing employment has been declining annually from 2016 through 2020, primarily due to structural adjustments in the shipbuilding sector caused by a sharp drop in ship orders and restructuring in the automobile industry, according to the FKI. Employment insurance subscriber statistics from the Ministry of Employment and Labor indicate that, compared to January 2016, employment in other transportation equipment including shipbuilding decreased by 74,000, and employment in the automobile sector decreased by 14,000 as of January 2020.

The increase in manufacturing employment in the United States, Japan, and Germany is attributed to these three countries strengthening their domestic manufacturing bases and continuously promoting reshoring policies to create jobs domestically following the 2008 global financial crisis. According to Chinese statistics, manufacturing employment in China has continuously declined during the same period due to a combination of factors including global economic slowdown, the U.S.-China trade dispute, supply-side reform policies continuing until the end of 2018, and persistent wage increases in the manufacturing sector.

South Korea Sees Sharp Increase in Local Employment at Overseas Manufacturing Subsidiaries
Global Manufacturing Production Share Declines

According to an analysis report on overseas investments by South Korea, the United States, Japan, and China, while manufacturing employment increased domestically in Japan and the United States from 2015 to 2019, local employment at their overseas investment subsidiaries decreased by 4.9% (216,000) and 0.2% (10,000) respectively. In contrast, South Korea's local employment at overseas investment subsidiaries surged by 29.4% (426,000). During the same period, local employment at overseas investment subsidiaries across all sectors in China also increased by 85.0% (1,041,000).

South Korea's share of global manufacturing production was the lowest among these six countries at 3.0% in 2019. Its ranking dropped from 5th in 2018 to 6th, overtaken by India (3.1%).

According to statistics from the United Nations Industrial Development Organization (UNIDO), the nominal value of global manufacturing production grew at an average annual rate of 2.2%, from $11.72 trillion in 2011 to $13.96 trillion in 2019. The shares of China and India, emerging as the "world's factories," increased by 2.1 percentage points (p) and 0.4p respectively compared to 2015. Conversely, the shares of the United States, Germany, and South Korea decreased by 0.6p, 0.3p, and 0.2p respectively, while Japan's share remained unchanged.

The FKI explained that South Korea's decline in 2019 was likely influenced by factors such as a 10.4% year-on-year decrease in exports due to the U.S.-China trade war, contraction in new corporate facility investments, factory relocations overseas, and restructuring in the automobile and shipbuilding industries.

Kim Bong-man, head of the FKI's International Headquarters, stated, "The ratio of overseas investment to domestic investment in our manufacturing sector is increasing," and emphasized, "The government must improve the environment for domestic investment and core technology development in manufacturing to ensure that the expansion of overseas investment by Korean manufacturing companies does not undermine domestic investment and employment."

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