Employment-inducing coefficient falls 26.4% in services over 10 years
Decline across all industries: 19.4%; manufactured goods: 14.5%
By Kim Byeo-ri, The Herald Business
The number of jobs generated by the service sector shrank by about a quarter over the past decade, as the rapid expansion of online shopping and automation sharply eroded employment creation, particularly in wholesale and retail trade and in the food and accommodation industries.
The Bank of Korea's "2010-2015-2020 Linked Input-Output Tables," released Tuesday, show that both the employment coefficient and the employment-inducing coefficient — measured on nominal and real bases — fell across all industries between 2010 and 2020, with the decline in service-sector indicators outpacing the rest of the economy.
The employment coefficient measures the number of workers directly required to produce 1 billion won ($649,000) worth of goods in a given industry, while the employment-inducing coefficient measures the total number of jobs — direct and indirect — generated across all industries when final demand in that sector rises by 1 billion won.
On a nominal basis, the service sector's employment-inducing coefficient fell 26.4 percent, from 15.64 persons in 2010 to 11.51 in 2020. Over the same period, the figure for all industries combined dropped 19.4 percent, from 12.00 to 9.67, while manufactured goods fell 14.5 percent, from 7.34 to 6.27.
On a real basis, the service sector's coefficient declined from 13.56 to 11.51 over the same period.
The employment coefficient tells a similar story. On a nominal basis, the service sector's figure fell from 10.81 in 2010 to 7.73 in 2020, while manufactured goods dropped from 2.27 to 2.01. On a real basis, services declined from 9.46 to 7.73 and manufactured goods from 2.36 to 2.01.
"The nominal employment-inducing coefficient for the service sector fell sharply, driven by the expansion of online shopping and automation, centered on wholesale and retail trade and the food and accommodation industries," the Bank of Korea said.
However, on a real basis, service prices in 2010 and 2015 were relatively lower than in 2020, which meant the rate of decline was comparatively smaller.
In 2020, the employment-inducing coefficient dropped steeply as the COVID-19 pandemic caused a sharp fall in the number of employed workers. It then declined gradually before posting a slight rebound in 2023.
The domestic sourcing rate for service intermediate inputs rose, driven by the expansion of producer services and outsourcing.
The domestic intermediate input ratio for services climbed from 35.8 percent in 2010 to 38 percent in 2020 on a real basis, and from 37.8 percent to 38 percent on a nominal basis over the same period.
The Bank of Korea said the economy is undergoing "servicification" — a trend in which services are becoming more deeply integrated with other sectors to generate higher added value and are playing an increasingly central role across the broader economy. The central bank added that the domestic intermediate input ratio for services has risen as companies continue to outsource producer services — such as professional, scientific and technology services — that they previously handled in-house, while also raising their level of specialization.
The linked input-output tables consist of a linked nominal table, which aligns the sector classifications and compilation standards of the three most recent benchmark-year input-output tables (2010, 2015 and 2020), and a linked real table, which deflates the data using prices from the most recent benchmark year of 2020.
Standard input-output tables have historically been difficult to compare directly over long time horizons because sector classifications and estimation methods vary by benchmark year. The Bank of Korea harmonizes the sector classifications and accounting methods across the three most recent benchmark-year tables to a comparable standard, enabling analysis of long-term structural changes in inter-industry linkages.
kimstar@heraldcorp.com
