Any plan to keep our companies at home?

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Any plan to keep our companies at home?

Published: 03 Oct. 2024, 20:02

Lee Sang-ryeol
The author is a senior editorial writer of the JoongAng Ilbo.

The climate is turning menacing on Korean manufacturing job prospects. The storm will come from the U.S. presidential election in November. Former President Donald Trump vowed to “steal” jobs from foreign countries — both friends and foes — in his second presidency during his speech in Savannah, Georgia. “With a vision I’m outlining today, not only will we stop our businesses from leaving for foreign lands, but under my leadership, we’re going to take other countries’ jobs,” Trump said. “You will see a mass exodus of manufacturing from China to Pennsylvania, from South Korea to North Carolina, from Germany to Georgia.”

Trump is known for rambling and talking big during rallies, but on tariff and trade policy, he could be dead serious, given his track record in the first term. During his first presidential bid in 2016, he vowed to revisit the Korea-U.S. Free Trade Agreement, calling it “a job killer.”

Korean policymakers mostly doubted a revisit to an FTA between traditional allies, but they were wrong. After Trump immediately addressed the issue, Korea was called to the renegotiation table. Trump still boasts that he protected the American pickup truck industry by sustaining tariffs on Korean imports that were to be lifted.

Will Korea be better off with Vice President Kamala Harris at the Oval Office? The Democratic standard-bearer promised to uphold the economic policies of President Joe Biden, buttressing manufacturing and jobs through multilateral cooperation. Through generous subsidies and tax breaks, the CHIPS and Science Act and the Inflation Reduction Act drew multi-billion-dollar investments from foreign companies. Korean names were some of the top pledgers.

According to the Financial Times, Korea has become the largest investor in the United States, signing deals worth $21.5 billion as of 2023. Household names like Samsung Electronics, Hyundai Motor Group and LG Energy Solution are building next generation facilities at billions of dollars. The massive-scale greenfield investments generate swarms of jobs. According to Reshoring Initiative data, Korea contributed to creating 20,000 jobs in the United States, the largest of 287,000 jobs created from reshoring by American companies and foreign direct investment in the United States last year. Korean companies pay $104,000 per worker a year, above the average salary of $87,000 at foreign companies in America, according to the Korea International Trade Association.

Regardless of who wins the election, Korean companies will be pressured to invest more in the United States as they hardly have any other choice. They have to build more factories there to not lose the market and anchor in U.S.-led supply chains. They are also rewarded with handsome subsidies and tax benefits.

But a job exodus causes a big hole in Korea’s domestic job market. The data already logs this toll. Manufacturing jobs declined by 43,000 last year. The employment number is barely sustained through short-term hiring and those who fell out of the economically active count after giving up on looking for a job. People out of work for more than six months totaled 110,000 as of August, the largest since the 1998 Asian financial crisis. People under 30 years old made up more than half of the lengthy unemployment. The dismal result stems from the deficiency in decent job offerings mostly from large manufacturers in Korea.

Radical incentives constitute the “job steal strategy” of the United States. Trump promises reduced taxes and regulation. He campaigns to axe the corporate tax he had cut to 21 percent during his first term further to 15 percent and kill 10 regulations for every new regulation. He plans to appoint an envoy to solicit foreign investment. Along with the carrots, he intends to whip up high tariffs on imports. Projections on the outcomes of his bigoted policy differ, but few doubt that Trump is dead serious on creating new factories and jobs for the working class.

Harris won’t let Trump get the upper hand on the economic front. Some in the Biden administration already suggested more government stimuli actions in the likes of the CHIPs Act.

Where does that put us? Do the government and politicians have any plan to keep our manufacturers at home? They must think seriously about creating a special committee to defend our jobs.

Translation by the Korea JoongAng Daily staff.