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Promoting good-quality job creation in the sector of SMEs

Related Document
Frame of Image tion in the Sector of SMEs
Joohoon Kim, Executive Director of Economic Information and Education Center at KDI
“Why are low-quality jobs created at SMEs? It is because the large companies hand over labor-intensive production to lower-level companies, causing exponential creation of new businesses amongst the lowest-paying bracket.”
Ⅰ. The Expected Role of SMEs
Korea is currently witnessing pan-national efforts to relieve polarization in the economic structure and in income distribution. Despite these efforts, little progress has been made in resolving these issues, leading to argue for expanded social welfare as a means of alleviating polarization. At the same time, concerns are also being raised about its resulting effects in relation to fiscal soundness and sustainability. Despite their differences, both parties agree on one point, namely that the fundamental solution to these issues lies in job creation. At present, initiatives to promote job creation are underway in the service industry and at SMEs in the manufacturing sector, but the created jobs are of low quality. Thus, the ultimate solution to this polarization will lie in structural improvements to boost
* This is the translated version of KDI FOCUS released on March 12, 2013.
KDI FOCUS
2
innovation capability and productivity in these sectors to enable creation of high-quality jobs. Moreover, it is difficult to be optimistic about the future of the Korean economy when viewing its future growth prospects through the


Full Text
Title Promoting good-quality job creation in the sector of SMEs
Similar Titles
Material Type Reports
Author(English)

Kim, Joohoon

Publisher

Sejong-si:Korea Development Institute

Date 2015-04
Series Title; No KDI Focus / 29
Pages 13
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Industry and Technology < General
Social Development < Employment
Holding KDI; KDI School

Abstract

Why are low-quality jobs created at SMEs? It is because the large companies hand over labor-intensive production to lower-level companies, causing exponential creation of new businesses amongst the lowest-paying bracket.

- Large firms have transferred a portion of their production process to lower-level companies in order to boost their price competitiveness.

- Because the jobs created at SMEs today are found in low-level companies, such as those with 5-19 employees, the quality of employment of SMEs as a whole is inevitably low.

- The rate of increase in per capita value-added for large firms was made possible by a steep decline in the rate of increase for employment.

- After the Asian Financial Crisis, SMEs began to catch up with large firms in terms of the rate of increase in R&D investment. (The rest omitted)