A Study on the Structural Change of Labor Market and Employment Inducement Effects in Korean Automobile Sector by the Attached Employment Input-Output Tables

Abstract

The objective of this study is to figure out main factors influencing on growth of employment in Korean automobile sector by Input-Output analysis. The result of analysis can be summarized as follows; One of the most important figures is expansion of automation or improvement of labor productivity in Korean automobile sector. But as well known facts, main production of automobile-related parts and components is done not by labors of major car makers but by a lot of subcontract workers or firms as well as in-house contractors. This results in rapid decrease of employment inducement effects as well as jobless growth problem in Korean automobile sector. Thus, we need to establish a reciprocally win-win system between subcontractors and majors. Second, although number of highly educated workers in automobile sector has been increasing until recently, but high unemployment of young generation and jobless growth problem are yet prevalent in Korean society. Nonetheless, domestic automobile producers have continuously increased overseas investment (FDI outflow) until recently. Therefore, major car makers need to take efforts to invest more and more domestically, i.e., home localization. Third, though investment demand is as an engine of growth in every economy,Korean employment inducement effects by investment demand are similar to those by consumption and export demand until recently. This means that three demand factors by final demand are all important simultaneously for sustainable growth and employment creation in automobile sector. At the present, we can say that automobile sector is the leading export sector for Korean economy. So we need to activate domestic consumption demand and to enlarge domestically investment demand particularly as well as to promote export demand by maintaining high quality, good design, good pricing strategy. In addition to these, the active and steady policies of both public and private economic agents are needed to be able to raise the global competitiveness to keep sustainable growth of Korean automobile sector.