"Era of Dual Digital and Green Transformation... Labor Market Spatial Polarization Must Be Addressed"

Dual Labor Market Structure Now Drives Spatial Polarization
Share of Quality Jobs in the Capital Region Rises by 5.8 Percentage Points
"Concentration in Knowledge-Based Industries Intensifies"
Support Needed for Youth Settlement and Living Incentives

As we enter an era of dual transformation, where digital and green transitions occur simultaneously, there are growing concerns that the labor market may become increasingly polarized in terms of geography. Experts suggest that to address this issue, central and local governments must establish joint governance and implement region-based strategies for skill transitions and youth retention.

Urban view seen from Sejong-daero, Jongno-gu, Seoul

The Korea Employment Information Service recently published the fall 2025 edition of "Regional Industry and Employment," which includes a report titled "Tasks for Regional Employment Policy in the Era of Dual Transformation: Solutions for Spatial Polarization in the Labor Market," authored by Joo Moo-hyun, Director of the Regional Industry and Economy Research Institute. The report aims to examine regional polarization and labor market challenges during the era of simultaneous digital and green transitions.

According to the report, digital technology holds the potential to enable decentralized and collaborative regional economies, moving beyond a centralized growth model. However, in reality, it is assessed to be widening the gap between regions. This is because disparities in digital adaptability and resilience are reinforcing the spatial hierarchy within the labor market.

Major cities, where high-skilled and high-wage knowledge industries such as finance and IT are concentrated, are reaping the benefits of increased productivity and wage growth driven by digitalization. Additionally, the normalization of remote work, rather than encouraging physical dispersion, is in fact intensifying the centralization of "work-eligible regions." In contrast, regions centered on traditional manufacturing are seeing a decline in repetitive and routine jobs, and face a heightened risk of falling into a low-skill trap due to the outflow of skilled workers.

Joo Moo-hyun, the author of the report, stated, "Cases from Sweden and Central and Eastern Europe show that the concentration of the information and communications technology (ICT) industry in capital regions can exacerbate regional imbalances." He added, "Korea, too, offers a lesson that simply digitalizing production technologies is not enough to reverse the outflow of young people and spatial polarization, given that digital-related jobs are concentrated in the capital area and a few major cities."

The same applies to the green transition. Regions with a high concentration of carbon-intensive industries are experiencing a simultaneous weakening of their industrial and employment bases during the green transition. The report forecasts that in regions with low gross regional domestic product (GRDP) and a high concentration of carbon-intensive industries, job volatility is severe, and the expansion of non-standard work such as temporary, part-time, and self-employment will further weaken stability and social protection.

Joo Moo-hyun explained, "Countries or regions lacking the capacity to manage a fair transition and innovation may face structural unemployment and stagnation. Gaps in process and technological innovation capabilities in carbon-intensive industries lead to reduced investment, growth, and income." He further stressed, "If no action is taken, economic and social disparities are expected to widen even further."

Looking at the spatial distribution of quality jobs, concentration in the capital region is becoming more entrenched. According to Statistics Korea's regional employment survey, the concentration of the top 20% of high-wage jobs in the capital region rose from 21.3% in 2015 to 27.1% last year, an increase of 5.8 percentage points. In contrast, the share of top jobs in non-capital regions declined. Moreover, the share of lower-tier jobs also fell, indicating that overall employment is increasingly concentrated in the capital region.

Joo Moo-hyun explained, "The dual structure of monopolistic conglomerates and non-monopolistic labor markets is now manifesting as spatial polarization. As regional gaps in the labor market widen, quality jobs are becoming more concentrated in the capital region during the era of dual transformation, while non-capital regions are increasingly falling into a low-skill trap." He particularly noted, "This concentration is even more pronounced in knowledge-based industries, which are at the forefront of the digital transition."

View of an apartment complex in Seoul as seen from Namsan Mountain, Seoul. Photo by Yonhap News Agency

The report argues that integrating regional labor markets in the era of dual transformation requires six pillars to work in tandem: realignment of governance, data-driven targeting, simultaneous strengthening of digital and green skills, systematic expansion of spatial connectivity, risk sharing through fiscal and financial measures, and building trust for a just transition. It also calls for an integrated strategy that combines regulation and investment, training and employment, and industry and welfare.

In particular, it emphasizes that establishing a system for integrating regional labor markets hinges on creating joint governance that aligns the central government's policy direction with the implementation capacity of local governments. It also highlights the need to enhance spatial connectivity to ease concentration in the capital region and support qualitative advancement in non-capital regions. Strengthening protections for vulnerable groups and non-standard workers is also necessary.

Joo Moo-hyun pointed out, "Labor market policies in regions undergoing industrial transition should not merely focus on quantitatively increasing new jobs, but on how well they institutionalize two pillars: region-based skill transitions and youth retention." He further proposed, "Policies that provide settlement and living incentives, such as a 'basic income for youth residency' and a 'youth settlement point system,' are needed."