The Bank of Korea: "Labor Market Supply-Demand Imbalance Increased After the Pandemic... Policies Needed for Manufacturing and Care Workforce"

Compared to the pre-pandemic period, the rate of job openings in most regions of South Korea has exceeded the rate of job seekers, indicating a deepening 'job mismatch.' Since the structural issues are largely related to job types, it is suggested that labor market supply and demand policies should focus more on occupations rather than regions.

On the 26th, the Bank of Korea stated in its 'BOK Issue Note' report titled 'Evaluation of Regional Labor Market Supply and Demand Situation' that "while a significant number of companies are expanding their hiring quotas in 2023 compared to 2019, the pre-pandemic year, the proportion of respondents reporting labor shortages increased from 12% in 2019 to 15.3% this year."

According to the report, although the distances between regions in South Korea are not large, the labor market supply and demand situation shows considerable differences depending on the region. Labor market tightness, an indicator of labor supply-demand imbalance, rose in all regions except Gwangju among the 16 regions excluding Sejong City.

This is a common phenomenon observed in most regions, but the degree varies by region. The labor markets in Chungnam and Gyeongnam regions showed notably higher tightness compared to other areas, while Seoul, Jeju, and Gwangju experienced relatively smaller increases in tightness.

Labor Market Supply and Demand Situation by Region. / Source: Bank of Korea

Supply-Demand Imbalance in Manufacturing Site Jobs and Care Services Increases

In particular, avoidance of manufacturing site jobs has intensified. By detailed occupation, the rise in tightness for manufacturing site jobs is mainly due to plastics manufacturing and other chemical sectors, metal sectors such as sheet metal and welding, and simple manufacturing jobs.

Song Sang-yoon, head of the Planning and Finance Team at the Jeju Headquarters who authored the report, explained, "The decrease in job seekers willing to work in manufacturing site jobs is not only among younger age groups under 30 but also among those in their 40s who are avoiding these jobs."

In the case of care services, labor market tightness has also increased due to rising job openings driven by aging. This was observed in 11 out of the 16 analyzed regions. Compared to the third quarter of 2019, the pre-pandemic period, care service job openings increased by 133.9% in the third quarter of this year, and the proportion of job openings approximately doubled compared to early 2019.

Song said, "The correlation coefficient between the increase rate of care service job openings and the change in the proportion of those aged 60 and over reached 0.58, indicating that aging has had a considerable impact on the increased labor demand for care services."

Song suggested that for manufacturing site jobs, efforts should be made to prevent workforce outflow by improving working conditions in essential occupations where automation is difficult (such as chemical and metal sectors), and for simple manufacturing jobs, automation should be promoted and implemented through policy to avoid production disruptions. Regarding care services, he emphasized the need to actively utilize foreign labor to prevent the expansion of labor supply-demand imbalances.

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