The Pros and Cons of Moon Administration's Regional Job Creation Projects

Evaluation of New Job Model Construction in Korean Economy
Concerns Over Excessive Investment Concentrated in Automobile Sector
Limitations of Administration-Centered Control Projects Also Pointed Out

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Dongwoo Lee] The Moon Jae-in administration's win-win job project, launched in 2019 as a national agenda for balanced regional development, has accelerated by signing a total of 12 agreements nationwide as of this month. The core of this project lies in the joint creation of new jobs within regions by labor, management, civil society, and government. Companies discover new business models to expand productivity through employment and investment, while workers gain access to quality jobs. Local governments and the central government aim to contribute to resolving employment difficulties and promoting balanced regional development through support.

However, as the project enters its fourth year, criticisms regarding trial and error have emerged. Issues include interregional conflicts over corporate attraction and concerns about overinvestment concentrated in specific industries such as the automotive sector. In particular, doubts have been raised about the project's sustainability as it fails to break away from an administrative-dominant, controlled business framework rather than a market-centered operation.

Establishing a New Job Model for the Korean Economy
Clear Effects on Direct Employment and Regional Economic Revitalization

According to the Ministry of Trade, Industry and Energy on the 31st, just before the Lunar New Year holiday on the 27th, representatives of labor, management, civil society, and government signed 'win-win agreements' for win-win regional jobs in three areas: Nonsan City in Chungnam, Iksan City in Jeonbuk, and Jeonju City. The Nonsan and Iksan-type jobs involve cooperation between local farms and food companies, while in Jeonju, Hyosung and large and small enterprises jointly foster the carbon fiber industry. President Moon Jae-in forecasted on the same day via SNS that "with the signing of three win-win regional job agreements in Nonsan, Iksan, and Jeonju, 515.1 billion KRW in investment will revitalize local industries and create 5,761 jobs by 2024."

The win-win job project is evaluated as having established a new job model for the Korean economy. Starting with the Gwangju-type jobs in January 2019, agreements were successively signed in Miryang, Gyeongnam (June 24), Daegu (June 26), Gumi, Gyeongbuk (July 25), Hoengseong, Gangwon (August 13), and Gunsan, Jeonbuk (October 24) the same year, officially launching the regional job model projects.

The Gwangju-type job project began full-scale automobile production in September last year. Gwangju Global Motors (GGM) was entrusted by Hyundai Motor Company to produce compact SUVs and plans to manufacture at least 70,000 units this year. The production model, Casper, recorded the highest number of pre-orders (18,940 units) among Hyundai's internal combustion engine models on the first day of pre-contracts. The initial workforce of about 540 employees will be increased by approximately 400 this year, with plans to establish a production system for eco-friendly vehicles such as electric and hydrogen cars to respond to market changes.

This year, on the 11th, the groundbreaking ceremony for the country's largest secondary battery cathode material factory applying the win-win regional job model was held in Gumi, Gyeongbuk. The Gumi-type job project involves major companies such as LG Chem's subsidiary LG BCM. The plan is to invest 475.4 billion KRW by September 2024 to build the largest domestic cathode material factory with an annual capacity of 60,000 tons. This achievement comes two years and six months after the win-win agreement was signed in July 2019. The government expects that once the factory is completed, cathode materials, which account for more than 40% of secondary battery material costs, will be stably supplied to the domestic industry. It is also anticipated to create approximately 8,200 jobs and revitalize the regional economy.

The Presidential Committee on Jobs, responsible for the win-win job project, stated, "Our economy's growth potential is declining, and structural difficulties such as weakening competitiveness of key industries and delays in discovering new industries persist," adding, "Economic actors in the region, including workers, companies, local residents, and local governments, will create new business models through social consensus to generate new investments and jobs."

Concerns Over Overinvestment Concentrated in the Automotive Sector
Limitations of Administration-Centered Controlled Projects Also Pointed Out

However, some have pointed out that the win-win job project model is concentrated in specific industries such as the automotive sector, raising the possibility of overinvestment and resource waste. The Gwangju-type job project operates compact SUVs and electric vehicle complete cars, while the Gumi-type job project runs LG Chem's electric vehicle battery material production plant. The Gangwon-type job project also focuses on ultra-small electric cargo vehicles (20,000 units annually), the Ulsan-type job project on electric vehicle parts, and the Gunsan-type job project promotes electric vehicle and electric vehicle parts manufacturing through the vehicle parts company MS Group. Excluding the recent regional job projects in Nonsan, Iksan, and Jeonju, seven out of nine cities where projects have been promoted so far are related to electric vehicles.

Local governments explained that concerns about interregional conflicts are increasing as job projects concentrate on the electric vehicle sector. A representative example is the demand by the Gwangju branch of the Korean Confederation of Trade Unions to halt the Ulsan-type job project at the early stage of the Gwangju job project. This is due to concerns that overlapping production items with the Ulsan-type job project could reduce jobs within the region.

There are also criticisms that regional job projects are excessively administration-centered controlled projects. It is explained that as a dependent policy with administrative dominance rather than market-centered corporate management, there are limitations to sustainability.

Researcher Kyuyong Lee of the Korea Labor Institute pointed out at the policy forum "Key Issues, Tasks, and Prospects for Revitalizing Regional Labor Markets" held at the end of last year, "Although regional policies could demonstrate flexibility unique to the region, these advantages are not utilized, and projects are operated rigidly. If they cannot stand independently in the market, it will eventually be difficult to sustain management."

He added, "It is necessary to secure flexibility in budgeting and project planning and to establish an evaluation infrastructure for performance management," emphasizing, "In particular, flexibility and cooperation in governance and delivery systems among governments are required."

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