The petrochemical industry is facing a structural crisis exacerbated by global oversupply and pressure for carbon neutrality, leading to concerns over a deepening phenomenon of 'outsourcing in crisis' that disproportionately impacts subcontractors and temporary workers. Experts emphasize the need for region-specific industrial and employment transition roadmaps, as the impacts vary across major petrochemical complexes such as Yeosu and Ulsan.
On July 31, the Korea Employment Information Service released a report titled 'Job Monitoring and Policy Tasks for the Petrochemical Industry in Yeosu and Ulsan,' diagnosing that the capital and equipment-intensive petrochemical sector has low employment elasticity and a dual labor market structure divided between primary and subcontracted workers. During economic downturns, subcontractors and temporary workers are likely to bear the brunt of employment shocks more than primary companies.
While the domestic petrochemical industry is a key sector, it is undergoing restructuring due to increasing uncertainties both domestically and internationally. Factors contributing to this include rising self-sufficiency rates in China, global oversupply, weakened competitiveness of generic products, and pressures for low-carbon transitions.
The regional impacts of this crisis are not uniform. The Yeosu industrial complex, which has the largest ethylene production capacity in the country, accounts for 49.5% of the national total, with a capacity of 6.415 million tons. The refining and chemical sectors dominate the complex, making up 98.4% of total production and 98.3% of exports.
Employment in the Yeosu industrial complex and related petrochemical sectors had been on the rise since 2017 but began to decline in 2023. By 2025, total employment in the complex had decreased by 3,900 from the previous year, with related sector employment dropping by 5,000.
In contrast, Ulsan has not experienced a sharp decline in employment. The presence of major industries such as automotive and shipbuilding, along with a well-established vertical integration structure among refining, petrochemical, and upstream industries, has provided a buffer against job losses. However, employment in the petrochemical sector peaked at 21,300 in 2022 and is projected to fall to 20,600 by 2025.
Governance structures also differ significantly between the two regions. Yeosu has established a collaborative framework involving the city government, the Chamber of Commerce, the industrial complex construction council, and major labor unions. It also operates re-employment and transition training programs through a convergence center. However, the response has primarily focused on emergency support, lacking a long-term industrial and employment transition strategy.
Ulsan, on the other hand, has a public institution-led response system through the Ulsan Human Resource Development Committee and the Job Promotion Agency, but participation from private companies and labor groups is limited. The Employment Information Service warns that the likelihood of a prolonged structural downturn is high, necessitating an early warning system to detect rising unemployment patterns and the establishment of proactive employment safety nets.
Both regions face a common challenge of shock transmission due to the dual structure of primary and subcontracted labor. Factory shutdowns by primary companies, changes in subcontractors, and lowest-bid contracting practices are leading to hiring freezes, job reallocations, and conflicts over employment succession among subcontractors. The issue of skilled labor is also complex, as new hiring is stifled by the industrial crisis while existing workers are leaving, resulting in a shortage of skilled labor on the ground.
The Employment Information Service emphasizes that the employment crisis in the petrochemical industry should be viewed not merely as a reduction in jobs but as a multifaceted crisis involving outsourcing challenges, skill mismatches, and increased demand for specific job roles. It calls for the establishment of differentiated industrial and employment transition roadmaps for each region, along with a redesign of job roles and skills based on industrial complexes and the strengthening of region-centered employment safety nets.
Park Ga-yeol, a deputy researcher at the Employment Information Service, stated, 'We need to build a region-based governance for a just transition that involves companies, labor, local governments, and training institutions. A regional committee for a just transition should be established to manage industrial, employment, and skill transitions in an integrated manner to proactively respond to the employment crisis.'
* This article has been translated by AI.
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