The government will take measures to designate Gunsan as an employment crisis
region a week after General Motors(GM) revealed it would shut down its factory in the western port city.
Presidential Spokesperson Kim Eui-kyum announced the decision in a media briefing Tuesday, saying President Moon Jae-in ordered the government to draft urgent countermeasures while expressing concern over the fallout from GM’s decision on the local economy.
Kim said that although the current economic situation in Gunsan does not meet the requirements for its designation as an employment crisis region, the government made the decision given the severity of the situation, adding it will revise regulations if necessary to make it happen.
Under the designation, Gunsan will be eligible to benefit from job stability measures through the state-sponsored unemployment insurance system as well as state assistance for local employment projects.
The spokesman added the Trade, Industry and Energy Ministry has also decided to name Gunsan as an industrial crisis special response region, a move expected to ease the financial crunch faced by companies and people doing business in the city.
This designation will also enable direct financial support in the form of subsidies and low-interest loans to firms and businesspeople.
A presidential official said that apart from these measures, the government will continue efforts to keep the Gunsan plant afloat and maintain its employment.
Designation as an employment crisis region can be requested by cities, counties and districts if changes to their job-related indicators meet certain conditions, such as an increase of over 20 percent in the number of applicants for jobseeker benefits.
The designation is approved by a policy deliberation committee chaired by the labor minister. Once the designation is granted, the central government provides various support measures for that region including for vocational training and job transfers.
Financial aid is also provided to companies that inevitably need to adjust their workforce due to reductions in output or sales.
Pyeongtaek in Gyeonggi Province received the designation in 2009 when Ssangyong Motor went through corporate restructuring. Tongyeong in South Gyeongsang Province was also designated as an employment crisis region between 2013 and 2015 amid major restructuring of small-scale shipbuilders.
The government's swift measures imply President Moon Jae-in is taking the issue very seriously.
The GM factory in Gunsan employs 2,000 workers, and its 135 partner firms hire another 17-thousand workers, which combined account for 20 percent of the local workforce.
The Gunsan economy has already been greatly affected by the closure of a Hyundai Heavy Industries shipyard.