Government relief should prioritise manufacturing, IT jobs: KDI

22-Oct-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

The government’s emergency relief should focus on retaining jobs in the manufacturing and other industries in the “tradable sector,” in a long-term move to limit the loss of quality jobs which will lead to a significant subsequent downturn in the service and retail industries, a state-run think tank said Wednesday.

The sector, according to economists, encompasses manufacturing as well as knowledge-based industries utilising information and science technology, whereas the “non-tradable sector” includes eateries, lodgings, travel, retail and wholesale, healthcare and education.

A loss of a substantial number of jobs in the tradable sector will be hard to recover, not only triggering a longer-than-feared economic slowdown but also undermining the country’s economic resilience and vibrancy in the medium to long term, the Korea Development Institute (KDI) said.

Manufacturing is taking a major brunt of the unprecedented virus-induced shock. But it could be amplified across other industries within the same sector, and ultimately to the service industry whose survival largely hinges on the more sustainable tradable sector-created jobs.

This is why the KDI considers government benefits should be extended to workers and firms in the quality industries to help them avoid outright shutdowns, a measure that should be executed following a thorough review of their pre-pandemic financials.

The KDI said the COVID-19 pandemic has slashed some 160,000 manufacturing jobs, which is highly concerning and likely to continue given the virus spread is showing no signs of full containment.

“Concern is growing,” said Lee Jong-kwan, an associate fellow of the Knowledge Economy Department at the KDI.

“Most of the jobs lost due to the virus thus far have been in services industries, but job losses in the tradable sector has become more pronounced since May, intensifying further through September following the second wave of the spread in August,” he said during a press briefing at the Sejong government Complex.

More jobs could be lost faster, he noted, given exports are unlikely to recover to pre-pandemic strength due to a heavier-than-expected dent in the global trade volume.

“If the current shock lasts longer, about 160,000 jobs in the service industry will disappear in non-Seoul areas previously known as industrial complexes,” he said.

The estimated losses will deal a harder blow to the economy which the institute says lost 1.08 million jobs and 830,000 jobs in April and September, respectively.

Lowering entry barriers to foster competition between the well-established players and latecomers therefore will be pivotal to creating quality, sustainable jobs, in addition to continued structural reforms to help low-skill workers relocate and train for new jobs.

“The market vibrancy should be facilitated via fierce competition driven by frequent entry and exit of as many players as possible, a process that will test the viability and feasibility of new ideas and technologies. This will in turn reshape the business landscape with the market participants and the country’s competitiveness bolstered as a result,” he said.

The Korean New Deal initiative, a key policy drive seeking to identify the new engine for sustainable growth should lay the groundwork to create an environment whereby a variety of business models can take shape.

“The government should build necessary infrastructure to help market participants to thrive. Equally important is improving overall productivity by prioritising the quality of jobs over the total number produced.”

The KDI said the tradable sector jobs will help increase employment multipliers, a measure of direct, indirect and induced jobs created or lost in the area.

“One job created in the knowledge-based industries will lead to 3.2 jobs in the non-tradable sector. This is why the currently struggling tradable sector should be eligible for greater state emergency relief until after the pandemic draws to an end.”

https://www.koreatimes.co.kr/www/biz/2020/10/367_297958.html

 

Category: Korea

Print This Post

Leave a Reply

You must be logged in to post a comment.