Korea suffering manufacturing job exodus
A recent report shows that over 72,000 manufacturing jobs went overseas last year, a figure that could have enhanced the country’s 4 percent unemployment rate by 0.3 percentage points. Over the past decade, over 500,000 jobs are expected to have gone abroad.
The report was released Monday by the Korea Economic Research Institute (KERI), which conducted research on the direct and indirect effects of outward direct investment (ODI) and foreign direct investment (FDI) on the local job market.
The KERI report states that ODI levels have exceeded FDI levels for the last decade between 2011 through 2020. On average, ODI has amounted to 12.4 trillion won, but
FDI has amounted to less than half of that at 4.9 trillion won. The number shows that on average, 7.5 trillion won more was spent on ODI than FDI, which equates to an average of 49,000 jobs that have flowed overseas.
When looking at the key industrial sectors, ODI in the semiconductor section accounted for the most, amounting to 2.6 trillion won, followed by electronics at 2.6 trillion won and the automotive industry at 2.2 trillion won. These respective sectors also ranked the highest in FDI during the past decade, with the semiconductor sector recording 40 billion won in FDI, electronics with 90 billion won and the automotive industry with 440 billion won.
“There have been outflows of jobs in key industries that have the highest employment rates, such as the electronics and automotive sectors,” KERI said in a statement. “There have been barriers to increasing local investment and employment.”
According to the Fraser Institute, Korea ranked 145th out of the 162 countries surveyed, in the regulation-related “economic freedom” ranking, lower than Pakistan at 137th due, to Korea’s strict labor regulations. The 2019 WEF’s Labor Market Competitiveness rankings placed Korea at 97th out of 141 countries.
“It is not bad to see an increase in foreign investment, but the problem is that domestic investment cannot keep up,” said Gwang-ho Choo, head of the economic policy department at the KERI. “To prevent jobs going overseas, we need to ease labor regulations so as to improve the unemployment rate and increase investment.”