Industrial Workforce Policy for an Economy in Transition

Abstract

Effective industrial workforce policies that facilitate the supply and demand of labor are crucial, especially during times of industrial transition. We are living through three such transitions, with the ongoing green transformation, digital transformation, and rapidly changing domestic and foreign industrial policies. According to the Ministry of Trade, Industry and Energy (MOTIE), the Industrial Technology Labor-Force (ITL) in five promising new industries will face a critical shortage of workers. These new growth sectors will need 140,000 new workers by 2030.

In light of the rapid growth of the global semiconductor industry, one of the country’s leading industries, the number of the workers in the sector is set to increase between 12.7 million and 17.7 million workers from 2021 to 2030, ultimately topping out at around 30.4 million workers. Demand for labor in these new industries is expected to increase faster than before due to the impact of the COVID-19 pandemic. Ensuring stability in supply and demand of high-skilled workers is vital for industrial development and industrial competitiveness.

However, the labor market has become more complex in the face of digital transformation and amid emerging new industries and technology. Rapid changes in industrial structure and production processes, coupled with uncertainties in labor demand, and the faster depreciation of accumulated skills have made the return on educational investment less certain, reducing the incentive to participate in education and training programs to acquire new skills and competencies, leading to a suboptimal labor supply in new industries.

These challenges in the supply and demand for workers can result in labor input inefficiencies, creating a vicious cycle of languid industrial development followed by weakened industrial competitiveness and lower labor demand. Therefore, effective industrial labor policies are critical to ensure continued industrial development and competitiveness during periods of industrial transition.

This paper analyzes the supply and demand for ITL and industrial workforce policies in Korea. It also describes the implications the findings carry for industrial workforce policy during periods of industrial transition.

Keywords: labor, labor economics, labor supply, labor demand, industrial-technological labor, ITL, labor policy, industrial labor, industrial labor policy, industrial workforce policy,

JEL Classification: E20, E23, E24, E29, F16, F66, J00, J01, J08, J11, J18, J21, J23, J24, J28, J30