Back To Top

New firms in knowledge intensive fields show strong long-term employment effect: report

Startups in the manufacturing industry, especially in knowledge intensive fields like semiconductors, tend to contribute more to job creation in the long term, compared with those in the service sector, a report said Sunday.

According to the report published by the Bank of Korea, a one percentage point rise in the founding of new manufacturing firms will bring about a 3.3 percentage point gain in employment over a 10-year business span.

The figures are based on employment and corporate data from 2004-2016.


In particular, the employment rate will rise more than 20 percentage points thanks to new startups of up-to-date technology firms in fields, such as chips, display and computer, the report said.

Newly-founded companies in the machinery, automobile and petrochemical sectors will push up the employment rate by 17 percentage points.

But in the service sector, the relation between company establishments and employment is weak as hotels, restaurants, retailers and transportation service firms have little impact on the job market over a longer period of time.

"Independent small restaurants and convenience stores face fierce competition from the time of opening. It's very hard for them to survive for more than 10 years," author Kim Ki-ho from the BOK said.

South Korea has a high number self-employed people due to early retirees who were left jobless due to recent corporate restructuring and retiring baby boomers. They have chosen to set up mom-and-pop stores or small restaurants, as it is hard for older people to land new jobs.

According to separate government data, there were 6.86 million unsalaried workers, such as self-employed people, as of August, accounting for 25.5 percent of the country's employed people. (Yonhap)