Changes in the Economic and Industrial Structure and Job Creation Strategies for Korea

The economic growth rate and employment growth rate in Korea have been decreasing simultaneously. Furthermore, the phenomenon of 'jobless growth' due to the decreasing capacity of job creation has continued. That is, the elasticity of employment growth to the GDP growth rate has decreased. The employment coefficient, which means the share of employment to GDP, has decreased; in 2011, it was down to 1/3 of the level in the early 1980s. The net employment increase over 1 percent-point growth between the late 1990s and early 2000s had reached about 70,000 to 80,000 people, but has recently dropped to fewer than 50,000 people. The employment-population rate of Korea was 63.9% in 2011, which was lower than those of the advanced countries such as Germany (72.6%), U. K (70.4%), and Japan (70.3%). Korea’s employment-population rate has shown a downward tendency since the early 2000s, contributing to the enlargement of the income gap between economic agents. The employment-population rate with women and youth (15-29 years of age) is lower, implying a loss in labor resource of good quality. Economic growth plans or industrial development strategies with the traditional view of employment, as derived demand from the product market, have reached their limit due to the recent economic depression and jobless growth. While economic growth or industrial development is still a necessary condition for job creation, it is not sufficient. Existing industrial development plans, thus, have to be modified or supplemented to induce idle labor force into better utilization; a new virtuous cycle between industrial development and job creation must be studied. This study aims to investigate the job-creating structure, find its defects in sectors of the economy and the economy as a whole, and to clarify the mechanism for setting up a virtuous cycle between industrial development and job creation. Ultimately, it attempts to explore new industrial development strategies and policy directions to create sustainable and decent jobs