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KDI Economic Outlook 2020-2nd Half
The COVID-19 Employment Shock and Policy Implications

November 11, 2020

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KDI Report VOD
How many jobs have been lost to Covid-19?

To find out, the total number of jobs was first estimated based on the assumption that there was no Covid-19 crisis, and then, this was compared to the actual figure.

A staggering one million 80 thousand jobs were lost to Covid by April of 2020.

And, while this was halved by the recovery in August, the resurgence from September has taken another heavy toll.

The biggest loss has been seen in the high-contact local service industry, which is comprised of businesses that provide food and accommodation, healthcare, education, and hair and beauty care, among others.

In fact, local service jobs account for 70% of all jobs.

The remainder is occupied by traditional industries, such as the agriculture, forestry and fisheries industry, mining industry, and manufacturing industry, as well as by the knowledge industry, which includes specialized services and high-tech manufacturing.

These industries also belong to the trade industry in which goods are produced and transported to other regions and countries.

Although the job loss in the trade industry has been relatively small, the downturn in global demand has meant that it too has seen an increasing fall in job figures since May.

From a long-term perspective, the conditions of the trade industry have a domino effect on the local service industry.

For example, an increase in the number of workers in the trade industry will raise the demand for such services as education, beauty and healthcare.

Service jobs can also be created through the production activities of the trade industry.

An analysis of the number of newly generated local service jobs finds that for every one job in the manufacturing industry, one additional job is created in local services,

and for every one job in the knowledge industry, 3.2 jobs are created.

This means that local service jobs will also fall by as much if there is a job loss.

In fact, in September, it was estimated that 160 thousand jobs were lost in the manufacturing industry. This implies that 160 thousand jobs may also be lost in related service businesses.

Indeed, the strong influence the manufacturing industry wields over the local service industry in terms of employment makes it highly likely that a job loss in one will lead to a job loss in the other.

Because a job loss in the manufacturing industry can lead to a job loss in the local service industry in the long-term, the government’s policy focus in sustaining employment must be placed on manufacturing jobs to protect against any negative repercussions.

As for the local service industry, policy efforts will be vitally needed to protect vulnerable groups.

In the mid- to long-term, quality jobs must be created by enhancing the productivity and competitiveness of industry as a whole through policies on new industries. The creation of quality jobs can generate more quality jobs in other areas, such as high-skilled services, and therefore, it can serve as a short-cut to raising the overall quality and quantity.
■ COVID-19 has sharply curtailed the demand for local services, taking a severe toll on employment, particularly in the local service industry.

■ In the short-term, policies must give priority to jobs in the tradable sector while the focus for the local service industry is placed on protecting vulnerable groups.

■ In the mid- to long-term, more capacity should be secured for the creation of jobs in the overall economy through the active entry of new businesses in the trade industry while the local service industry is restructured.
 
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Office of Global Economy
Providing Economic Forecast and Macroeconomic Policy Direction, the Groundwork for a Brighter Future

The Department of Macroeconomics is conducting researches on the macro economy and macroeconomic policy, particularly focusing on suggesting the analysis of macroeconomic trends and current status of the economy at home and abroad, the economic forecast, and the policy direction of the macro economy. The Department is also in charge of establishing, sustaining and maintaining various econometric models, based on which it analyses policy effects and develops a long-term economic forecast.

Main Tasks
  • Economic trend analysis, short- and long-term forecast
  • Policy study on macroeconomic management
  • Basic structural analysis on macroeconomic areas
  • Maintenance of multi-sectoral dynamic macroeconomic model
Department of Macroeconomic Policy
  • LEE. Tae Suk

    Director, Division of Analysis and Evaluation

    82-044-550-4725
  • CHO, Byungkoo On leave

    Director and Vice President, Department of North Korean Economy

    82-044-550-4725
  • LEE, Jongkyu

    Fellow

    82-044-550-4725
  • WEE, Hyeseung Dispatched

    Research Associate

    82-044-550-4725
  • NAM, Jinwook On leave

    Specialist

    82-044-550-4725
  • KIM, Seulki

    Research Associate

    82-044-550-4725
  • CHUN, Eunkyung

    Research Associate

    82-044-550-4725
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