Korea has designated Gunsan, the home to General Motors' money-losing assembly line, as an emergency response zone to provide job support and tax incentives as the southwestern city is expected to suffer high unemployment, the commerce ministry said Thursday.

The designation came nearly two months after the American automaker in February announced a plan to shut down its underutilized Gunsan plant, 274 kilometers south of Seoul, by the end of May.

The Ministry of Trade, Industry and Energy said it made the decision as the GM plant shutdown is expected to pour cold water on the city's already struggling local economy with a population of 270,000 following Hyundai Heavy Industries Co.'s shipyard closure in July. 

It is the first time that the government has designated a city as a "special industrial crisis response zone" since it provided a legal framework in June.

Under the measure, those who lost jobs will be eligible for government subsidies and job training, and companies that newly start businesses in the city can get tax exemptions for up to five years and other incentives.

The government said it will also seek ways to develop research and development centers to develop autonomous vehicles and test sites as well as renewable energy institutes to revitalize the local economy.

 About 2,600 workers at GM Korea, equivalent to about 15 percent of its workforce, have applied for a voluntary retirement package this year that has been offered by the Detroit-based automaker as part of its restructuring program.

The number of people leaving Gunsan has been on the rise since GM's announcement of the plant shutdown. A total of 534 people left the city in February alone, the biggest population outflow since April 2012, according to Statistics Korea.(Yonhap)