[Second Half Growth Strategy] GDP Raised from 2% to 3%, but Employment Forecast Cut... "Jobless Growth"

This Year's Employment Expected to Increase by 150,000...Down by 10,000

A More Conservative Estimate Than KDI and Bank of Korea

"Low Employment Inducement Coefficient in Semiconductors Limits New Jobs"

Although the government significantly raised its forecast for real GDP growth this year from 2.0% to 3.0%, it actually lowered the projected increase in the number of employed persons by 10,000 compared to its previous estimate. Critics argue that while the economy is expanding—driven by the booming semiconductor industry thanks to artificial intelligence (AI)—the reality is a "jobless growth," as jobs closely tied to livelihoods are declining.

On the 8th, the "Gyeonggi-do 5070 Job Fair" held at Suwon Messe in Gwonseon-gu, Suwon-si, Gyeonggi-do, is bustling with job seekers. Photo by Yonhap News

According to the government's economic growth strategy for the second half of the year, announced on July 14, the number of employed persons in 2026 is expected to increase by 150,000 compared to the previous year. This is a decrease of 10,000 from the projection made in January's "2026 Economic Growth Strategy" (160,000).

The government sharply raised its real GDP growth rate forecast by 1 percentage point, thanks to strong semiconductor exports. However, employment indicators are expected to fall behind. The latest estimate is also lower than previous projections by the Korea Development Institute (KDI, 170,000) and the Bank of Korea (180,000). This is interpreted as clear evidence of "decoupling" between macroeconomic statistics and the sentiment felt by the public.

The government explained that this is because, by its very nature, the semiconductor industry—the foundation of GDP growth—does not generate a large number of jobs. In addition, weak employment performance in April and May this year as a result of the Middle East war, and delays in the construction sector's recovery caused the outlook for employment to be revised downward. Kang Kiryong, Deputy Vice Minister of Economy and Finance, stated, "The upward revision of real GDP growth mainly comes from the semiconductor sector," and added, "Since the employment inducement coefficient in semiconductors is not particularly high, there are limitations in job creation, which led us to lower the number by 10,000 compared to before."

The employment inducement coefficient refers to the number of direct and indirect jobs created for every KRW 1 billion in sales. According to the Hyundai Research Institute, the coefficient for semiconductors—a capital-intensive sector driven by advanced equipment and large-scale facility investments—was 2.4 in 2023. This is only about one third of the overall industry average (8.2).

To alleviate youth employment difficulties, the government plans to create more than 200,000 private and public sector jobs by 2030. Of these, 100,000 will come from the private sector, focusing on new industries, science and technology, culture, and finance by supporting start-ups and expanding internships. The remaining 100,000 jobs will be public sector positions, which will include expanded work experience opportunities linked to recruitment, public value creation, and strengthening the competitiveness of core national industries.

Additionally, the government intends to nurture more than 200,000 specialized young professionals in advanced industries by 2030, providing support for both employment and entrepreneurship. Programs to boost job competency in high-demand advanced sectors—such as K-New Deal Academy and bootcamps—will be greatly expanded and strengthened with ongoing follow-up management. A new platform will be created to match the professionals trained through these initiatives with business enterprises, public institutions, and the social solidarity economy. There are also plans to launch a provisional "Career Bank" that will issue certificates of work experience, including not only qualifications, education, and work history but also other types of job capability data.

However, doubts remain as to whether the numbers pledged by the government will ultimately translate into sustainable, high-quality employment that can relieve youth job insecurity. Some point out that the time lag is too great for these measures to offset the immediate employment slowdown this year. Lee Kanggu, Senior Research Fellow at KDI's Fiscal and Social Policy Research Department, advised, "In youth policy, it is necessary to assess not only targets such as talent cultivation and the number of jobs but also actual employment results, as well as job quality and sustainability." He added, "We must also consider how to protect those displaced during the AI-driven structural transition and provide them with renewed opportunities for growth."

This content was produced with the assistance of AI translation services.