Characteristics of Employment in the Manufacturing Industry and a Review of Job Creating Subsectors

While overall production of the manufacturing industry has contracted due to the COVID-19 pandemic, total employment levels have not undergone a major adjustment. Unlike the service industry, which saw an immediate reduction in employment, the manufacturing industry has more-or-less maintained the scale of its employment. This property of manufacturing employment has served as a buffer against short-term production shocks and has helped limit the negative spillover effects on the labor market. Generally, employment in the manufacturing industry is not sensitive to short-term economic downturns. However, when the production outlook deteriorates for the longer term, major reductions in employment follow. Once large-scale restructuring occurs, industrial employment seldom rebounds thereafter. To boost job creation in the manufacturing industry, this study proposes independently classifying relevant manufacturing subsectors as 'job creators,' independent of and distinguished from existing sectoral categorizations as 'new industries' or 'leading export industries.' Job policies in the private sector should thus target these job creators, identified as such for their high potential to produce net employment growth.