The central government will use and expand a model by Gwangju City and Hyundai Motor aimed at boosting job creation across the country’s provincial areas, according to the Ministry of Economy and Finance.
The ministry said the government will encourage regional offices to adopt and develop the model with companies of any size to open plants, create jobs and spur growth in their respective regions.
It will launch a committee consisting of experts from the private and public sectors to begin accepting proposals from regional and city governments by the end of March to set up joint ventures with companies.
The committee will then select two to three areas where the selected regional offices and companies can locate their manufacturing ventures and begin hiring employees by the end of June.
Those that have gained approval will receive not only support and tax cuts from the government, but also regional administrations will offer further incentives and other financial packages.
The central and regional governments will cover 50 percent of the costs to build a high-tech joint venture plant, and support the building of childcare centers and workers’ apartments near the factory.
The finance ministry said it hoped it could also attract Korean companies that have established plants overseas to come back home.
“We are seeking to expand the Gwangju model amid rising unemployment, especially in areas hit hard by local industry downturns,” Finance Minister Hong Nam-ki said in a press conference in Seoul.
“The proposals have to show that they will be win-win among the involved parties including regional offices, companies, workers and local residents in the long term.”
In January, Gwangju City and Hyundai Motor agreed to set up a manufacturing joint venture in the city’s industrial center that will hire around 11,000 workers to build Hyundai’s small sport utility vehicles beginning 2021.
Under the plan, workers of the Gwangju-Hyundai joint venture will get paid 50 percent of the average annual income earned by those who work at Hyundai’s main Ulsan factory. They are also expected to work 44 hours a week, less than the 52-hour workweek.
The city government will provide tax incentives and fill in the workers’ income gap by financing their healthcare, housing and other social security costs.
Backed by the central government, this plan is aimed at “redistributing jobs” amid the onslaught of weak employment data over the past months.
Analysts say although the model looks promising, the private sector should take the lead in job creation.
“I feel cautious about the model, given that the government is leading the project to create jobs. The private sector has to be at the forefront in job creation,” said Yun Chang-hyun, an economist at the University of Seoul.
