Gwangju model for industry could spread

The Gwangju model - building new factories to be run by less expensive manpower to increase Korea’s industrial competitiveness - may be spreading.

The Blue House senior secretary for job creation on Friday said two additional cities offering manufacturers deals similar to the one Gwangju is offering Hyundai Motor, will likely be announced within the first half of this year.

“I have met with two cities,” said presidential job secretary Jung Tae-ho during a press briefing held at the Blue House. “The mayors have asked specific questions regarding the Gwangju job model.”

He added that other cities including Gunsan in North Jeolla, Gumi in North Gyeongsang and Daegu also have plans that relate to the Gwangju model.

“In my opinion, if lucky, in the first half at the minimum two cities will likely gain momentum,” Jung said. “And as such, the government will be preparing so that this job model will spread nationwide.”

Last month, Gwangju, the biggest city in the southwest, reached an agreement with Hyundai Motor to create a joint venture car factory that will have the capacity of producing 100,000 vehicles a year. Gwangju will own the largest stake in the company and offer housing and welfare support to workers to compensate for their comparatively low wages. Factory workers will be paid 35 million won ($31,100) in annual salaries - less than half what Hyundai Motor pays workers are paid in other factories.

It is seen as a milestone achievement that will boost the Gwangju economy and creating jobs for young people in that region.

The job model was also a campaign promise by President Moon Jae-in.

Jung did not specify which industry or industries will be involved in other such deals.

“Eventually the issue will be linked to a region’s future and economic vision,” Jung said, adding that the industries will probably have some connection with the region.

“Most of the heads of local governments are interested in future [oriented] industries,” Jung said.

He added that the Ministry of Trade, Industry and Energy is working on creating a legal foundation to support regional co-existence job models. The plan will be announced in June.

On the Gwanju-Hyundai Motor joint venture, Jung said the joint venture will be set up within the first half of the year and the factory will be completed by 2021 at the latest.

“I’ve been told that a detailed schedule is being discussed closely between the Gwangju city government and Hyundai Motor,” Jung said.

He said the Gwangju factory might prevent Hyundai cars being made overseas instead of domestically.

“At a time when low employment is becoming systematic, we have a lot of concerns about how to create jobs,” Jung said. “And we arrived at the Gwangju job model, where jobs are created though social discussion and agreement, which will be a breakthrough for our economy and vitalize the struggling regional economy.”

He emphasized it will be the first time in 23 years that Hyundai Motor will build a new car factory in Korea.

“There’s a lot of interest from the business sector,” Jung said. “Some have told me that the Gwangju job model has created an environment where factories overseas could return production [to Korea].”

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]