Concerns Over Job Losses in the AI Era, Government and Experts Put Their Heads Together

Ministry listens to policy recommendations from job market experts

As concerns grow over potential job losses in the era of artificial intelligence (AI), the government has discussed with experts the direction that future policies should take.

On the 25th, the Ministry of Strategy and Budget held the third relay roundtable to explore policy directions for responding to polarization, with a focus on jobs.

Following discussions on "balanced regional development" and "health and medical care" at the first and second roundtables, this session was convened to address "jobs," one of the highest-priority tasks for the Korean economy.

With the economy entering a transition period driven by the AI industry, concerns are mounting that job substitution and job reductions will accelerate going forward. At the same time, there are mixed projections that overall improvements in industrial productivity will create new jobs. The government launched the roundtable based on the recognition that it must support the private sector in strengthening its capacity to create jobs, and that it must search for policy alternatives to narrow labor market job gaps between young and middle-aged workers, and between regular and non-regular workers.

Experts including Ahn Jaeyoung, Center Director at the Korea Research Institute for Vocational Education and Training, Gil Eunsun, Research Fellow at the Korea Institute for Industrial Economics and Trade, and Han Yosep, Research Fellow at the Korea Development Institute (KDI), attended the meeting. They offered a wide range of views on diagnosing the current state of job polarization caused by changes in industrial structure such as AI and by the dual structure of the labor market, and on possible future policy responses.

First, the government explained that this year it has expanded fiscal support for jobs, such as direct job creation programs and employment services, to 32.3 trillion won, an increase of 6.2% from the previous year. In particular, it has extensively overhauled vocational training and newly established and reinvested in AI convergence vocational training programs for 70,000 people, with a budget of 180 billion won.

However, as shown by indicators such as the recent increase in young people classified as having taken a break from work and the widening employment rate gap between younger and older age groups, employment conditions for young people remain difficult. At the same time, the wage gap between large and small-to-medium-sized enterprises is also widening. The government stressed that, alongside expanding public-sector jobs, it is essential to play a role in encouraging private companies to increase hiring and in ensuring that technological progress can coexist with job creation.

The experts emphasized that as AI transition, automation, and demographic changes advance, policies for cooperation between the government and private companies are needed so that AI can drive innovation in industry while still coexisting with jobs. Specifically, they pointed out that it is important to promote the development of new industries through multifaceted corporate support, while at the same time ensuring that high-quality jobs can be stably created under the leadership of the private sector and businesses. To this end, they highlighted the need for integrated design of industrial policy and employment policy, and for incentives linked to companies' efforts to create jobs when providing corporate support. They also underscored the need to secure labor market flexibility so that functions can be reallocated in response to rapidly changing work environments and work processes.

In terms of job mismatches, they added that it is necessary to enhance the effectiveness of vocational training support by establishing AI-based career development pathways and strengthening linkages between vocational training and employment services, and by creating a flexible vocational education system to nurture talent in advanced fields.

The ministry stated that, based on the recognition that "jobs are the report card of our economy" and "jobs are the very lives of members of the community," it will continue to explore directions for addressing job-related issues, drawing on expert recommendations. In particular, it plans to work with relevant ministries to introduce a structure in which the creation of quality jobs is continuous and stable, for example by ensuring that private entities that create good jobs receive more favorable treatment in terms of fiscal support.

Lee Byungyeon, Director-General for Inclusive Growth Policy, who chaired the roundtable, said, "As advances in high-tech fields bring structural changes to the job landscape, it is important that policy directions closely identify demand in the private sector and take an approach that encompasses both industrial and employment perspectives." He added, "We will continue to listen to the opinions of experts and the public, further specify our response directions, and reflect and implement them in medium- to long-term national development strategies."