[EDITORIALS]Declining investment a worryAs investment declines and more companies transfer operations overseas, the domestic manufacturing industry is in a critical state.
An analysis indicates the nation’s potential economic growth is on “red alert.” There is nothing new about these recent negative developments, but what is of concern is the speed and depth of the problem.
According to the Korea Chamber of Commerce and Industry, overseas investment by domestic manufacturers has increased, with 1,800 applications filed last year compared to 1,000 in 1994.
Foreign investment comprises only 10 percent of investment in domestic facilities. While low-tech manufacturing industries such as textiles and clothing have moved to such countries as China, high-tech companies now are leaving the country as well.
Both domestic and foreign investors are avoiding new investments here, and the result is a reduction in the number of domestic manufacturing companies. In 1990, there were over 5.4 million manufacturing firms, compared to fewer than 4.2 million this year. While in other countries it has taken almost 30 years for the manufacturing sector’s share of employment to drop 10 to 17 percentage points, in Korea it only took 12 years for the sector’s share of employment to decline 8 percentage points. The drop in foreign investment is also behind growing youth unemployment. Entrepreneurs have lost the motivation to proceed in the domestic manufacturing industry because of expensive real estate, endless restrictions, militant labor unions and an unproductive but expensive workforce. Before it is too late to prevent the loss of our manufacturing industry and potential economic growth , the government, workers and politicians should unite.
The government should adhere to laws to prevent the economy from being further damaged by militant labor unions, ease regulation and remove uncertainty in government policies. Labor unions should try not to seek immediate wage and benefit increases for their members. If we lose our manufacturing industry, labor unions will not only lose their influence but also their gains.