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Global Value Chain and Policies for Industrial Workforce

Author Heeseon Choi, Jinkeun Yu, Jong-ki Kim, Mi-kyung Jung Date 2016.02.01 Page 27
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A defining characteristic of twenty-first-century globalization has been the intensification of global value chains (GVCs).that is, their fragmentation and international reorganization. The globalization of value chains has expanded consistently since it first began to accelerate in the first decade of the twenty-first century.
The purpose of this study is to analyze the effects of these intensifying GVCs on Korean employment and wages, and to consider
their implications for future workforce policy.
A central aim of this research is to verify whether GVC intensification is in fact creating a skill-biased effects in Korean employment
and wages. The concept of stages of value chains is also introduced in order to examine structural changes in the labor market amid GVC intensification. To this end, Chapter 2 will review GVC indicators, the general concept, and the classifications of skill level. Chapter 3 applies the methodology of Timmer et al. (2013) Global Value Chain and Policies for Industrial Workforce to analyze the GVC income (value-added) and GVC jobs (employment) from a general equilibrium theory standpoint. We use the World Input-Output Database (WIOD) for the period from 1995 to 2011. Chapter 4 analyzes Korea’s manufacturing industry in terms of skill-biased wage effects from GVC using data from the 2009 Survey Report on Labor Conditions by Employment Type and the Local Area Labor Force Survey. To understand the effects of GVC expansion on wages and skill structure in the context of the overall labor market, we analyze the manufacturing industry and the manufacturing value chains. In this case, we introduce the concept of stages of value chains. This paper identifies six groups according to value chain stage and skill level. Additionally, we discuss about the German manufacturing labor market amid ongoing GVC intensification. Chapter 5 analyzes the IT industry as a case study from a GVC standpoint.
Based on the analyses, we draw the implications for workforce policy. Each chapter mentions relevant implications, while Chapter 6 puts all of these implications together. The focus of the implications on workforce policies are for high-skill workers at the pre-production stage and for middle-skill workers at the production stages, with an examination of the implications for the post-production stage workforce.
While the category of workforce encompasses workers both in manufacturing and in manufacturing-related services, the term will be understood to refer primarily to the former for the purposes of this study. The discussion of implications for workforce policy in Chapter 6 will focus on IT manufacturing, which is adopted for a case study in the study. We focus the implications of the education and training policies of IT manufacturing, which is the main content of the workforce policy of IT manufacturing. Because of this focus on IT manufacturing, the research cannot address issues such as displacement amid the structural changes resulting from GVC intensification. In a ship-building industry, for example, many skilled-workers lose their jobs because of expanding foreign investments.