▲ Employment Inducement Coefficient
The Bank of Korea (BOK) released an analysis on Tuesday (June 30) indicating that the job creation capacity of the service sector has weakened significantly due to factors such as the expansion of online shopping.
According to the 2010-2015-2020 Linked Input-Output Tables released by the BOK on this day, both the current and constant price employment coefficients and employment inducement coefficients fell between 2010 and 2020, with the service sector showing a particularly rapid decline.
The employment inducement coefficient refers to the number of jobs directly and indirectly created across all industries by 1 billion won of final demand.
The employment inducement coefficient for the service sector fell by 26.4% from 15.64 persons in 2010 to 11.51 persons in 2020, based on current prices.
During the same period, the figure for all industries decreased by 19.4% (from 12.00 to 9.67 persons), and for manufactured goods by 14.5% (from 7.34 to 6.27 persons).
Based on constant prices, the service sector figure decreased from 13.56 to 11.51 persons.
The employment coefficient, which represents the number of direct employees required per 1 billion won of output, showed a similar trend.
The service sector employment coefficient decreased from 10.81 persons in 2010 to 7.73 persons in 2020 based on current prices, while the figure for manufactured goods fell from 2.27 to 2.01 persons.
Based on constant prices, the service sector figure fell from 9.46 to 7.73 persons, and the manufactured goods figure from 2.36 to 2.01 persons.
The BOK explained, "The employment inducement coefficient for the service sector, based on current prices, fell significantly, particularly in the wholesale and retail, and food and accommodation sectors, due to the expansion of online shopping and automation."
However, based on constant prices, the decline was relatively smaller because service prices in 2010 and 2015 were lower than in 2020.
The BOK added that the employment inducement coefficient dropped sharply in 2020 as the number of employed people plummeted due to the COVID-19 pandemic, followed by a moderate downward trend and a slight rebound in 2023.
The localization rate of service intermediate goods showed an upward trend due to the expansion of producer services and outsourcing.
The domestic input rate for services rose from 35.8% in 2010 to 38.0% in 2020 based on constant prices.
Based on current prices, it rose from 37.8% to 38.0% during the same period.
The BOK explained, "The 'servicification of the economy' is underway, referring to the phenomenon where the convergence between services and other sectors intensifies to create high value-added products, and the importance of services increases across the economy." The bank added, "The domestic input rate for the service sector has risen as companies continue to outsource producer services, such as professional, scientific, and technical services, which were previously performed internally, to enhance expertise."
The Linked Input-Output Tables consist of linked current price tables, which align the sector classifications and compilation standards of the input-output tables for the last three base years (2010, 2015, 2020), and linked constant price tables, which are adjusted to the prices of the most recent base year (2020).
Existing input-output tables have limitations for direct long-term time-series comparisons because sector classifications and estimation methods vary depending on the base year.
Accordingly, the BOK is analyzing long-term changes in inter-industry linkage structures by organizing the sector classifications and accounting methods of the input-output tables for the last three base years into comparable standards.
(Photo: Bank of Korea, Yonhap News)
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