The South Korean government is expanding its growth model, traditionally centered on semiconductors, to include artificial intelligence (AI) transitions across all industries, including steel, petrochemicals, and shipbuilding. This initiative aims to strengthen industrial competitiveness while enhancing social safety nets to support a rebound in potential growth rates.
On August 6, the government convened an emergency economic headquarters meeting and a ministerial meeting on economic structure innovation, led by Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol, to discuss the 'Directions for Economic Structure Innovation.'
The government plans to pursue economic restructuring through two main pillars: 'industrial structure innovation' and 'growth for all.' It will provide a package of support for fiscal, tax, financial, and regulatory improvements, and will continuously monitor progress through a high-level inter-agency consultative body.
Industrial structure innovation will focus on introducing AI-based manufacturing processes in key industries such as steel, petrochemicals, biotechnology, electronics, shipbuilding, and automobiles. The government plans to develop high-value-added and eco-friendly transition strategies for each industry in phases.
In the steel sector, the government will promote the development of Korean hydrogen reduction steelmaking technology, with a total investment of 786.8 billion won from 2026 to 2030. For the petrochemical industry, a comprehensive support plan that includes AI process innovation, business restructuring, and the introduction of alternative raw materials will be announced in the fourth quarter.
In biotechnology, a comprehensive roadmap for AI drug development and plans to foster K-pharmaceutical and bio frontier companies will be established. The shipbuilding industry will see the introduction of humanoids such as welding robots, along with support for fully autonomous navigation and the development of eco-friendly, high-value vessels. The automotive and parts industries will transition to AI factories and promote the development of domestically produced autonomous driving AI models.
Support for the physical AI industry will also be expanded. New research and development initiatives will focus on three core components of robotics: actuators, sensors, and robotic hands. Humanoids tailored to ten key industries, including chemicals, steel, automotive, batteries, shipbuilding, electronics, logistics, healthcare, hospitality, and displays, will be developed.
A plan to deploy 1,000 AI robots annually will be established, linking AI factories with smart factories. The government aims to build a data factory that produces training data for robots across 300 processes in ten sectors, along with a comprehensive government data library.
In the 'growth for all' sector, the government will strengthen safety nets for vulnerable groups and support asset formation throughout the life cycle. Revisions to basic pensions and retirement pensions will begin in the third quarter, and plans to enhance safety nets for vulnerable groups, including welfare eligibility criteria for living and medical benefits, will be developed in the fourth quarter.
The government will also address labor market restructuring due to the AI transition. Plans to restore youth employment and establish a basic employment stability plan for industrial transitions will begin in the third quarter, while a 'Basic Law on the Rights of Workers' to protect special employment and platform workers will be prepared in the fourth quarter. Measures to protect the health of night workers will be announced in the third quarter.
Youth policies will be detailed across various stages of social entry, including employment, housing, asset formation, marriage and childbirth, and cultural activities. The government aims to train over 200,000 AI professionals and create more than 200,000 private and public jobs, along with over 100,000 entrepreneurs.
In the regional economy sector, a growth strategy for rural areas will be developed in the third quarter, focusing on the integration of AI smart agricultural facilities and the expansion of essential services in rural and fishing communities. The government will also develop tourism content linking traditional markets and local festivals, while intensively fostering national universities connected to regional industries.
To support the funding for structural innovation, the government plans to establish a future response fund, revise local education financial grants, and restructure expenditures. The specific scale of funding and the method for calculating grants will be finalized after further discussions.
Additionally, the ministerial meetings on economic structure innovation will be held at least once a month. Urgent tasks, such as youth employment recovery and retirement pension activation, will be prioritized, with industry-specific measures for steel and petrochemicals announced sequentially.
* This article has been translated by AI.
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