Busan, South Korea’s second-largest city, confronts a multitude of challenges as it witnesses the decline of traditional manufacturing industries and a lack of knowledge-based industries and high-paying jobs essential for attracting and retaining young people. In response to these pressing issues, the city’s policies have been limited in scope, primarily concentrating on tackling the job opportunity imbalance in the western region of Busan. This article will discuss the current state of Busan’s economy and job market, the consequences of job scarcity on its population, and the necessary changes in its businesses and policies to ensure long-term sustainability and growth.
I. The current state of Busan’s economy and job market
No Busan-based company among the top 100 by revenue in South Korea
Despite its status as a major city, Busan’s economy has struggled to keep up with the rapid growth and development of the capital region. There is a glaring lack of representation among the top 100 companies in South Korea by revenue, with not a single Busan-based company making the list. This absence demonstrates the disparity between Busan and more economically prosperous regions in the country, highlighting the urgent need for the city to attract and retain large businesses capable of generating high-paying jobs and fostering economic growth.
City’s policies targeting young people to work at small and medium-sized enterprises (SMEs)
In an attempt to combat the job opportunity imbalance in the western region of Busan, the city’s policies have focused on encouraging young people to work at SMEs. However, these policies have been limited in scope and impact, primarily offering incentives such as financial rewards for young people who choose to work in these smaller companies. While this approach may help address the immediate issue of youth unemployment, it fails to tackle the root cause of the problem: the lack of stable, high-paying job opportunities that can provide long-term career growth and security.
Local businesses and ecosystems lagging behind counterparts in the capital region
The disparity between Busan’s local businesses and those in the capital region is a significant barrier to the city’s economic growth. Job seekers perceive regional SMEs as being 10-20 years behind their counterparts in Seoul and other metropolitan areas, making it difficult for these businesses to attract and retain top talent. This gap is further exacerbated by the limited resources and support available to local businesses, hindering their ability to innovate, grow, and compete on a national and global scale. To reverse this trend, Busan must invest in developing its local business ecosystem and fostering a competitive environment that can drive innovation and create high-paying jobs.
II. The decline of Busan’s traditional manufacturing industries
Failure to foster the development of knowledge-based industries and high-value-added sectors
As Busan’s traditional manufacturing industries continue to decline, the city has faced challenges in adapting to the rapidly changing global economy. One key issue is its failure to foster the development of knowledge-based industries and high-value-added sectors. These industries, which include technology, research and development, and advanced manufacturing, are essential for driving economic growth and creating high-paying jobs in today’s competitive global market. To address this shortcoming, Busan must prioritize investments in education, research, and infrastructure that can help attract and nurture the growth of these cutting-edge industries.
Expansion of food, lodging, and retail sectors
In the face of declining manufacturing industries, Busan has seen growth in the food, lodging, and retail sectors, as well as lifestyle-based services. While this expansion has helped compensate for some of the economic losses associated with the decline of traditional industries, it has also led to an over-reliance on these low-value-added sectors. These jobs often provide lower wages and less job security than those in high-value-added sectors, making them less appealing to young professionals seeking long-term career prospects.
Inferior compensation and conditions in comparison to the capital region
The decline of traditional industries and the limited availability of high-paying jobs in Busan have resulted in inferior compensation and working conditions compared to those in the capital region. This discrepancy has made it even more difficult for the city to attract and retain young talent, exacerbating the ongoing outflow of young professionals to more economically prosperous regions. To reverse this trend, Busan must prioritize initiatives that focus on improving the quality of available jobs, providing competitive compensation and benefits, and fostering a work environment that supports professional growth and development. By doing so, the city can create a more attractive job market that will encourage young professionals to remain in the area and contribute to long-term economic growth and sustainability.
III. The impact of job scarcity on Busan’s population
Young people leaving Busan in search of employment
The lack of high-paying jobs and career opportunities in Busan has led to an increasing number of young people leaving the city in search of employment elsewhere. This outflow of young talent not only diminishes the city’s workforce but also exacerbates the aging population problem. The Yeongdo-gu District, in particular, has struggled to retain its younger population as the area grapples with a rapidly declining and aging population. By focusing on creating stable, high-paying job opportunities, Busan can encourage its younger population to remain in the city and contribute to its long-term economic growth and sustainability.
Declining population of young people (18-34 years old)
The scarcity of job opportunities in Busan has contributed to a significant decline in the city’s young population. Between 2015 and 2022, the population of young people (18-34 years old) in Busan fell from 790,000 to 650,000 – a reduction of 140,000. This decline poses a significant challenge to the city’s future economic prospects and overall vitality, as a smaller young population means a reduced workforce and lower levels of innovation and entrepreneurship.
Continued decrease in population projected through 2040
If the current trend of young people leaving Busan in search of better job opportunities continues, the city’s population is projected to keep decreasing through 2040. By 2025, the young population is expected to decline to 610,000, followed by 530,000 in 2030 and a staggering 400,000 by 2040. This continued decrease in population not only threatens Busan’s economic growth but also puts additional strain on its social services and infrastructure. To reverse this trend, the city must prioritize attracting businesses that offer high-paying jobs and invest in initiatives that drive long-term economic growth, ensuring a more prosperous future for its residents.
IV. The need for change in Busan’s businesses and policies
Adoption of a salary system that pays based on work performed
To attract and retain young talent, Busan’s businesses need to adopt a salary system that compensates employees fairly based on their work performance. By doing so, they can create a more competitive job market, encouraging young people to stay in Busan and contribute to the local economy. This approach has been successful in cities like Pyeongtaek and Asan, where the presence of large businesses such as Samsung Electronics and Samsung Display has led to a surge in population and economic growth.
Establishment of a rational organizational culture
A rational organizational culture that promotes collaboration, transparency, and innovation is essential for fostering a productive and motivated workforce. By establishing such a culture, businesses in Busan can create an environment that attracts young talent and encourages them to stay in the city. The cases of Pyeongtaek City in Gyeonggi Province and Asan City in Chungnam serve as examples of how the establishment of thriving businesses with progressive cultures can lead to substantial economic and population growth.
Fostering a belief in the potential for collective growth
To ensure long-term sustainability and success, businesses in Busan need to foster a belief in the potential for collective growth. This involves investing in the development of their employees, providing opportunities for professional advancement, and creating an environment where innovation and entrepreneurship can thrive. By prioritizing these areas, businesses can attract young talent and contribute to the revitalization of Busan’s economy. The transformative power of large businesses in cities like Pyeongtaek and Asan demonstrates the potential for collective growth when companies invest in their employees and local communities.
A Call for Comprehensive Policy Reform
Busan faces a future of decline and eventual “extinction” if no changes are made
Without significant changes to its business environment and job market, Busan faces a future of decline and eventual “extinction.” The city must tackle its pressing issues, such as the lack of stable, high-paying jobs and the development of knowledge-based industries, to ensure its long-term viability and prosperity.
Emphasis on creating high-paying jobs and developing knowledge-based industries
To reverse its current trajectory, Busan must place a greater emphasis on creating high-paying jobs and developing knowledge-based industries. By doing so, the city can attract and retain young talent, which is crucial for driving economic growth and maintaining a healthy, balanced population.
A shift in policies to focus on local businesses and ecosystems instead of merely on the younger population
For sustainable progress, policymakers in Busan need to shift their focus from merely targeting the younger population to investing in the development of local businesses and ecosystems. By supporting businesses that can offer stable, high-paying jobs, the city can foster long-term economic growth and incentivize young people to stay in Busan.
Importance of strategic planning and investment to ensure long-term sustainability and growth for Busan
Strategic planning and investment are key to ensuring long-term sustainability and growth for Busan. This includes investing in infrastructure to attract large businesses, fostering a business-friendly environment, and creating a skilled workforce. By prioritizing these areas, Busan can work towards reversing its current demographic trends and securing a more prosperous future for its residents. Learning from successful examples such as Pyeongtaek City in Gyeonggi Province, Asan City in Chungnam, and Cheongju’s Cheongwon District, Busan has the potential to transform its economy and safeguard its future.
