Capital Region Manufacturing Jobs 'Negative Growth'... Signs of Prolonged Slump

2019 Net Growth Rate -0.2%
First Negative in 10 Years
Non-Capital Regions Face More Severe Employment Deterioration
Three Consecutive Years of Contraction from 2016 to 2018

[Asia Economy Reporter Donghoon Jeong] Domestic jobs have shown signs of long-term stagnation as they have slowed down over the past decade. In particular, jobs in the manufacturing sector in the 수도권 (Capital Region) experienced negative growth for the first time in the last 10 years.

The Korea Chamber of Commerce and Industry's Sustainable Growth Initiative (SGI) pointed out on the 10th in its report titled "Current Status of Regional Jobs and Future Policy Tasks" that the dynamism of job creation is shrinking. SGI stated, "Employment sluggishness has persisted over the past 10 years," adding, "Since 2016, both 수도권 (Capital Region) and 비수도권 (Non-Capital Regions) have seen a decline in job creation rates, resulting in a decrease in the 'net increase rate,' which is the difference between job creation and job disappearance rates."

This report is based on an analysis of job creation and disappearance rates using microdata from the National Business Survey from 2010 to 2019. The job creation rate refers to the proportion of new jobs created through business expansion or startups, while the disappearance rate refers to the proportion of existing jobs lost due to business contraction or closure.

What is most concerning is the decrease in manufacturing jobs. Especially in 수도권 (Capital Region), the decline in job creation has recently widened, turning the net increase rate negative in 2019. In 비수도권 (Non-Capital Regions), the rate was negative for three consecutive years from 2016 to 2018. This suggests that the deterioration of the manufacturing employment market in 비수도권 (Non-Capital Regions) is more severe than in 수도권 (Capital Region).

Jobs in manufacturing and related industries serve as a backbone for our economy. For every 1 percentage point growth in manufacturing firms, employment increases by 3.3 percentage points, indicating a high employment creation effect. Even during external shocks such as economic downturns, manufacturing secures employment stability compared to other industries, helping to mitigate shocks. Permanent employees with employment contracts longer than one year account for 95.7% of the entire manufacturing workforce. The disappearance of manufacturing jobs could shake the foundation of our economy.

SGI recommended expanding foreign direct investment (FDI) attraction and strengthening reshoring policies (return of manufacturing to the home country), deregulating high value-added service industries, expanding startup support infrastructure, and supporting the development of new growth engines in super-regional areas to improve the employment market through quality job creation and balanced regional development.

In particular, it called for expanding foreign direct investment attraction and strengthening incentives for domestic return of technology companies. The report stated, "In response to the recent reorganization of the global value chain (GVC), foreign direct investment attraction should be expanded, focusing on advanced industries with high global investment demand such as semiconductors, displays, and materials, parts, and equipment (SoBuJang)."

It was also pointed out that tailored reshoring policy support considering the characteristics of specialized industries linked to regional key industries should be strengthened. Support such as tax incentives, subsidies, and manpower assistance is determined by the size and location of companies, and the proposal is to increase incentives for high-tech companies to return through segmented policy support that considers the characteristics of regional key industries and advanced industries.

Woo Tae-hee, Executive Vice President of the Korea Chamber of Commerce and Industry, emphasized, "We must expand quality jobs through value-added creation by convergence and fusion between manufacturing and service industries and the advancement of regional industries. In 수도권 (Capital Region), it is important to enhance the effectiveness of job creation through customized support policies considering corporate growth paths and industry characteristics, and in 비수도권 (Non-Capital Regions), to increase regional economic dynamism through startup activation linked to regional key industries."

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