Domestic Car Industry Direct and Indirect Employment 1.9 Million: "Government Must Expand Employment Retention Support"

Report on KAMA's Analysis of Direct and Indirect Employment in the Automobile Industry on the 15th

Hyundai Motor Ulsan Plant Export Shipping Dock (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] A survey revealed that the number of people employed directly and indirectly in the automobile industry reaches 1.9 million, accounting for 7.1% of the total domestic employment.

According to the "Analysis of Direct and Indirect Employment Status in the Automobile Industry" report released on the 15th by the Korea Automobile Manufacturers Association (KAMA), as of 2018, the number of direct and indirect employees in the domestic automobile industry recorded 1,903,000, a 14.4% increase compared to 10 years ago (1,664,000). During this period, the total domestic employment increased by 12.8%, from 23.78 million to 26.82 million, indicating that the automobile industry's growth rate was higher.

The increase in imported cars and eco-friendly vehicles, diversification of car models and parts due to the application of advanced safety technologies, and the expansion of overseas production leading to increased parts exports have contributed to employment growth. By sector, within direct employment, the "automobile parts" sector increased by 65.4%, and among indirect employment, the "sales and maintenance" sector grew by 27.2%. Conversely, in direct employment, the "finished car sector" saw a 10.8% decrease in employment despite a slight increase in production volume, due to investment in production facilities and expanded automation.

In Japan, the number of direct and indirect employees in the automobile industry was 5.46 million, accounting for 8.2% of total employment, while in the United States, it was 7.25 million (4.7%). The proportion of employment in the automobile industry was 1.1 percentage points higher in Japan than in Korea, whereas it was 2.4 percentage points lower in the United States.

The association explained that since the automobile industry has a significant impact on employment and the national economy, support to maintain employment after the COVID-19 pandemic is urgent. According to the report, the employment inducement coefficient, which refers to the number of direct and indirect jobs created by producing 1 billion KRW worth of specific goods, was 8.4 for the automobile industry, higher than other industries such as general machinery (8.0), electrical equipment (7.6), and semiconductors (2.4). Additionally, wage levels are relatively higher compared to the overall industry and manufacturing sector, indicating that these are considered quality jobs.

Jung Man-ki, Chairman of the Korea Automobile Manufacturers Association, stated, "The automobile industry has extensive related industries and high employment and production inducement effects, thus having a significant impact on employment and the national economy." He emphasized, "To preserve 1.9 million direct and indirect jobs, the government needs to promptly execute the third supplementary budget, which includes emergency liquidity support (3.1 trillion KRW) and emergency funds for small and medium-sized enterprises (1.9 trillion KRW), and expand and relax the requirements for employment retention subsidies." He added, "To enhance the competitiveness of domestic materials, parts, and equipment industries and prepare for trends in the automobile and parts industries, it is necessary to cultivate specialized personnel in related fields and strengthen worker education."