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Job creation in the digital age

The Korean economy will go nowhere if industries are stigmatized and segregated between old and new.
Oct 21,2017
The World Economic Forum, best known for its annual meeting in Davos, Switzerland, hosted a panel in Seoul last week with the Korea Advanced Institute of Science and Technology to discuss jobs and growth in the age of the fourth industrial revolution.

Despite the country’s strength in cutting-edge semiconductor and smartphone technology, the World Economic Forum has ranked Korea 25th in its readiness for the fourth industrial revolution. The panelists explained why.

Doosan Group’s chief technology officer, Lee Hyun-soon, said technological advances have significantly improved productivity in traditional industrial fields, and he expects automation to cost Korea about four million human jobs. He noted the spread of smart factories, where automated machines can replace human labor, and said Korean manufacturers have to adopt this new technology to maintain competitiveness against foreign rivals.

Lee noted the transition to these technologies has been slow in Korea because there are not enough engineers who are adept in smart sensors, big data and artificial intelligence. Despite youth unemployment hovering above 22 percent, Korean businesses are facing a dire shortage of manpower needed in the new industrial age.

The panel concluded that the new industrial age should be addressed in the context of existing traditional industries. One businessman said the government’s fourth industrial revolution committee ought to merge new technologies with traditional industries, rather than seek innovation in new areas. He cited Germany, which has been running smart systems in factories for more than 20 years.

Korean businesses, especially small and midsize ones, are stuck in the past. Out of 67,000 manufacturers with 10 or more employees, just 5 percent have automated their operations. A mere 6.7 percent of smart sensors are locally produced. As a result, factory workers doing simple labor face the threat of losing their jobs to machines, while the number of people qualified to work with these machines remains lacking.

President Moon Jae-in champions so-called engaging growth oriented toward improving human lives. The goal is to shift from a model that has long revolved around large companies and exporters and build a new paradigm that can generate more jobs and income for the people, boost demand and eventually stimulate economic growth.

Moon has proposed raising the minimum wage and corporate taxes, and pledged to add 810,000 public-sector jobs, scrap a performance-based salary system and eliminate labor regulations that can make jobs unstable. He says his model is the engaging growth recommended by the International Monetary Fund and Organization for Economic Cooperation and Development.

But his so-called engaging growth is not engaging at all. It instead categorizes and separates new industries from traditional ones. In his five-year road map to promote innovation, the focus of support is on start-ups and new industries.

In this way, the problem of jobs being eliminated because of automation and digitalization cannot be addressed. The increase in public-sector jobs will make college graduates entirely engrossed in state exams for government posts, while the private sector will continue to struggle finding engineers that can work with new technologies.

The panel participants defined the fourth industrial revolution as the scaling up of traditional industries. In the new industrial age, traditional industries will become more productive through the application of new technologies.

For such a transition, the workforce must be realigned. The government must accelerate labor reforms and pass bills that are pending in the National Assembly to revitalize Korean business. It should not fret about giving more favors to large companies. The Korean economy will go nowhere if industries are stigmatized and segregated between old and new.

JoongAng Ilbo, Oct. 20, Page 32

*The author is an editorial writer for the JoongAng Ilbo.

Kim Dong-ho