NABO Industry Trends and Issues (No. 23)
Published on 28 August 2019
Published by Industry & Employment Analysis Division of the Economic Analysis Bureau
I. Employment, Population and Pension Trends
(Employment Trends) The number of employed people in July 2019 increased YoY and the number of employed youth also increased, whereas the number of employed people in their 30s and 40s decreased.
(Population Trends) As of May 2019, 25,300 babies were born, which is 2,700 fewer, YoY; while there were 24,700 deaths, an increase of 700, YoY. The number of marriages decreased by 1,900, YoY, to 23,100.
(Pension Trends) In 1Q19, subscriptions increased YoY, with the NPS fund witnessing increases mainly in corporate and voluntary continuous entry subscriptions, while the retirement pension fund witnessed increases in the Defined Benefit (DB) plan, Defined Contribution (DC) and the Individual Retirement Plan (IRP). The number of NPS subscribers increased by 0.6%, YoY, and the volume of the reserves increased by 7.9%.
II. The Ratio of the Actual Transaction Price to the Disclosed Price of Apartments
The disclosed property price refers to the appropriate prices of land and housing, providing the criteria for taxation and welfare demand and provision. The disclosure of property prices started as the “land price disclosure system” in 1989 and expanded into the “housing disclosure system” in 2005. The ratio of the disclosed price to the actual transaction price of Seoul apartments sold in January 2018 is on average 64.97%. The average rate by each local district ranges from a maximum of 68.7% to a minimum of 60.5%, exhibiting a maximum 8.2%p gap. Since disclosed property prices are used for many administrative purposes such as welfare and taxation, the appropriateness of setting the disclosed price needs to be improved to meet policy objectives.
III. The Impact of the US-China Trade Dispute on Consumption and Plant & Equipment Investments
The background of the US-China trade dispute lies in reducing the US’ trade deficit on the surface, but there are views that the fundamental cause is the US’ need to guard against China’s national industry policy aimed at becoming a manufacturing powerhouse, and the US’ desire to secure an advantage in terms of technological power. After the US and China failed to reach an agreement over three rounds of trade talks, the two countries have imposed additional tariffs since June 2018. Concerns are mounting about potentially negative impacts on Korean exports, since Korea is highly dependent on exporting to both countries. In this regard, this report conducted an estimation of the impact of decreased exports caused by the US-China trade dispute on factors such as consumption and plant & equipment investments by using a macro-econometric model in the form of a simultaneous equation. As a result, while the impact of a decrease in Korean export goods on major macro-economic variables is relatively significant in the first year, such impact appeared to generally subside from the third year onwards.