Posted May. 04, 2017 07:17,
Updated May. 04, 2017 07:32
According to the Korea Chamber of Commerce and Industry on Wednesday, foreign companies operating in Korea have created 270,000 jobs in Korea, up from 200,000 over the past 10 years, though Korean jobs going overseas increased from 530,000 to a whopping 1.63 million during the same period. The gap increased from 2.5 times to six times in a 10-year time span. While overseas advancement is a natural phenomenon in the current era of globalization, the very fact that there are more Korean companies advancing overseas is a problem.
Last year, Korean companies' direct overseas investment posted an all-time high of 35 billion dollars. Samsung Electronics' overseas hiring continues to increase, from 240,000 in 2012 to 330,000 in 2015, but its domestic hiring has decreased over the past three years, posting 93,200 last year. Hyundai Motor and Kia Motors stopped constructing factories in Korea 20 years ago while they continue building them overseas.
"Korea exodus" seems inevitable for companies as they seek cost-cutting and profit increase. Korea has enacted a law that offers benefits to companies returning to Korea including tax cuts, but only 30 companies have returned. According to a study by the Korea Economic Research Institute, half the companies that returned are regretting because of lower productivity and higher labor costs. In the automobile sector, the average wage at Korea's top five automakers was 93.13 million won (82,343 dollars), higher than Japan's Toyota at 79.61 million won (70,389 dollars). However, the time needed to make one vehicle is 26.8 hours in Korea compared to 24.1 hours at Toyota. The World Economic Forum ranks Korea's regulatory environment at 105th among 138 countries.
Youth unemployment has increased as the government failed to make up for lost jobs resulting from the Korea exodus. According to Statistics Korea, Korea's unemployment rate was 3.7 percent last year while youth jobless rate was 9.8 percent, showing the biggest gap since the agency started to compile related data. This means that younger people are being hit the hardest amid a continued downturn in the job market. Some 290,000 new jobs can be created if 10 percent of factories return to Korea. This is equal to 61 percent of the total number of unemployed young people.
The U.S., Germany and Japan aggressively seek to bring back companies through drastic measures such as deregulation and tax cuts. Job creation and national security are the two key tasks that Korea's new president should tackle. The newly-elected president will have to present a comprehensive solution for a fundamental change in labor-company relationships, improvement in labor productivity, tax cuts and drastic deregulation. That is the only way for Korea to boost more jobs for the younger people.