Short-Term Recovery of Trade Industry Jobs Difficult... Differential Approaches Between Companies and Maintaining a Virtuous Cycle Needed
[Asia Economy Reporter Kwangho Lee] Jonggwan Lee, a research fellow at the Knowledge Economy Research Department of the Korea Development Institute (KDI), stated on the 21st, "Due to the global spread of the novel coronavirus infection (COVID-19), employment shocks are gradually occurring in trade industries centered on manufacturing," and emphasized, "The priority of employment retention should be placed on jobs in trade industries."
In a report titled "Patterns of Employment Shocks Caused by COVID-19 and Policy Implications" released on the same day, Research Fellow Lee stressed, "Once jobs in trade industries disappear, it is difficult for them to reappear in the short term. If the number of unemployed rapidly increases, economic recovery may be delayed, and the capacity for medium- to long-term job creation may also be hindered."
Trade industries refer to knowledge industries that use knowledge as a primary production factor (such as advanced manufacturing, information and communication, professional services, science and technology services) and other traditional trade industries (such as agriculture, forestry and fisheries, mining, manufacturing).
Research Fellow Lee estimated that "approximately 160,000 jobs in manufacturing disappeared by September, and if this shock spreads, about 160,000 service industry jobs could disappear in manufacturing-related regions over the next decade."
He continued, "In knowledge industries, about 70,000 jobs disappeared in March but recovered after April; however, recently, the scale of decline has expanded again, making the employment shock more visible."
He pointed out, "Considering that when one manufacturing job disappears, one regional service job also disappears, and when one knowledge industry job disappears, 3.2 regional service jobs disappear, the shock to trade industries could lead to a reduction in the overall economy's medium- to long-term job creation capacity. In particular, the decrease in knowledge industry jobs could also lead to a reduction in high-quality, highly skilled service jobs."
Furthermore, he forecasted, "If COVID-19 has also limited wage increases for workers in trade industries, the resulting decrease in consumption capacity could cause even more jobs to disappear."
Research Fellow Lee expressed, "The decrease in jobs in trade industries can also spread employment shocks to regional service industries," and emphasized, "It is necessary to support companies to prevent bankruptcy due to temporary shocks."
He especially mentioned, "It is important to differentiate between companies experiencing temporary crises due to COVID-19 and those with accumulated insolvency, and approach them differently to maintain a healthy virtuous cycle within the economy."
Additionally, he added, "Regarding employment retention subsidies, it is desirable to continue providing them for high-quality trade industry jobs until the health crisis is over."
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