Youth Unemployment and Manufacturing Jobs at Worst: Koo Yoon-chul: "Consumption Boom, AI-Powered Restructuring to Revitalize Capital"
Deputy Prime Minister Koo Yoon-chul announced a policy to revitalize capital markets and boost consumption, highlighting the 311,000 new jobs added in September for those aged 60 and older and those dependent on social welfare, amid massive layoffs in the steel and petrochemical industries.
Deputy Prime Minister Koo continued on the 21st at the APEC Finance Ministers' Meeting, declaring, "Korea is prioritizing the AI transformation amid a sense of urgency that applying AI across all sectors of society is the only solution to boosting potential growth."
He added, "AI-based digital finance is rapidly expanding. Our task is to foster innovation while simultaneously building a responsible financial ecosystem. This means balancing opportunities with risks and ensuring financial accessibility to vulnerable groups and remote areas."
He declared a strategy to "Embrace the Vulnerable with AI-Powered Digital Finance." Meanwhile, manufacturing employment in September decreased by 61,000, marking the 15th consecutive month of decline. Construction employment fell by 84,000, marking the 17th consecutive month of decline. Agriculture, forestry, and fisheries saw a decline of 146,000. Employees aged 60 and older increased by 381,000, and the health and social welfare services industry saw a 304,000 increase.
On August 20th, Deputy Prime Minister Koo stated, "If the petrochemical industry is determined to restructure its business, the government will do its utmost to support it." He added, "A restructuring agreement involving 10 major petrochemical companies is scheduled to be signed," and ordered a reduction in large-scale restructuring.
continued, "The answer to overcoming the crisis lies in reducing excess facilities and fundamentally enhancing competitiveness."
He urged them to "promptly prepare and submit a detailed business restructuring plan," expressing a "life-or-death resolve." He warned against "voluntary reductions" by stating, "Companies that delay or free-ride will be excluded from support."
Immediately after returning to Korea with unresolved tariff negotiations in the United States, Deputy Prime Minister Koo announced on the 20th, "We will host the 'Korea Grand Festival' from October 29th to November 9th to spark a national consumption boom."
He also emphasized the importance of stimulating consumption by stabilizing the real estate market and revitalizing the capital market, ensuring that market funds flow to productive sectors. Deputy Prime Minister Koo continued, "The government will become a solid springboard for corporate growth. We will focus our capabilities on the hyper-innovative economy and the AI transformation, and we will swiftly announce measures to restore the competitiveness of key industries such as steel and petrochemicals." He ordered the steel and petrochemical industries to reduce their workforce with AI funding.
The government's September statistics clearly showed a decline in the manufacturing sector, with employment gains concentrated in the health and social welfare services sector (304,000), arts, sports, and leisure services (75,000), and education services (56,000).
Among these gains, the wholesale and retail sector saw a 28,000 increase, the largest increase in seven years and 10 months since November 2017's 46,000. The accommodation and food service sector saw a 26,000 increase, likely driven by the government's consumer stimulus measures. In age-group statistics, those aged 60 and older became the primary job creators, increasing by 381,000 jobs. This figure surpassed the overall increase of 311,000 in September.
The increase in employment was driven by a 146,000 decrease in the number of employed youth aged 15-29, bringing the youth employment rate to 45.1%, a 0.7 percentage point drop from a year ago and the 17th consecutive month of decline.
Employment among households, the main age groups, decreased by 45,000 jobs for those in their 40s and 11,000 jobs for those in their 50s, fueling social unrest. However, Deputy Prime Minister Koo directed a shift from a "national consumption boom" and "capital market revitalization" to an "AI transformation."
According to government statistics for September, the economically inactive population decreased by 116,000 to 16,009,000. However, the number of people who were "resting" increased by 42,000 (1.7%), and the number of people who had given up on finding a job increased by 9,000 to 369,000 compared to the same period last year.
This indicates that the labor market is becoming increasingly alienated from the main labor force, and government-led restructuring is focusing on this segment, accelerating social polarization.
Korean media outlets reported on the IMF report provided by the Ministry of Strategy and Finance, stating, "However, if trade conflicts ease and countries accelerate structural reform efforts, AI adoption could improve productivity, which could have an upside effect on the global economy." On the 14th, they added, "Productivity Improvements Through AI Adoption as Countries Accelerate Structural Reform Efforts."
The Associated Press warned that risks to the global economy "remain tilted downward," including high debt levels, Trump's attacks on the Federal Reserve, and the possibility of a "sudden repricing" of technology stocks currently near record highs.
However, the IMF stated that easing trade tensions and the potential for AI-driven productivity gains could pose "upside" risks to the global economy. The term "upside" was changed to "actual risk," and "eased trade tensions" was replaced with "potential for productivity improvements." The term "AI structural reform," which the Korean media and the Ministry of Strategy and Finance had added, was omitted.
As a presidential candidate, President Lee Jae-myung announced "alleviating polarization with AI" and "fair opportunities and outcomes" during a TV debate on April 25. On April 22nd, the candidate spoke exclusively with Professor Harari at the National Assembly, stating that "worldly conflicts stem from inequality" and advocating for "resolving the inequality gap with AI."
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