Beyond Supply: Addressing Worker Mobility and Incentive Structures in Regional Industrial Workforce Policy

For balanced national development, effec­tive regional industrial workforce policies are crucial. Historically, employers, workers, and the finance sector have all heavily favored the Seoul Capital Area (SCA), which includes Seoul and the surrounding province of Gyeonggi, in addition to the nearby metropolis of Incheon. Despite a plunging birth rate and a rapidly graying population, the SCA continues to see its population grow, and now exceeds 50 percent of the country’s total population. But this is not organic growth; rather, it comes at the cost of Korea’s smaller cities and provincial areas. A shrinking non-metropolitan population translates to fewer opportunities for skill de­velopment, ultimately leading to a diminishing labor supply. This decline poses a critical threat to the competitiveness and development of re­gional industries, potentially creating a vicious cycle of worker shortages, reduced competi­tiveness, and fewer jobs. To break free from this trap, robust regional industrial workforce policies are essential. The current government’s national initiative includes policies targeting educational development zones, educational reform, local universities, and educa­tional innovation programs that aim to foster startups. However, these workforce policies primarily focus on expanding the overall labor supply, which may not be enough. With this in mind, in this paper I analyze the supply and demand of labor in regional indus­tries, review key issues in regional industrial workforce policies, and propose policy recom­mendations to improve their effectiveness. Thank you for reading this abstract of a paper by the Korea Institute for Industrial Economics and Trade! We are South Korea's premier think tank studying the nexus where trade and industry intersect. http://www.kiet.re.kr/en https://www.ssrn.com/index.cfm/en/korea-inst-industrial-econ-trade-res/