The number of newly-employed in South Korea is seeing sharp year-on-year rises, suggesting that Asia’s fourth-largest economy has turned the corner on unemployment.
The Korea National Statistical Office announced on Wednesday that the number of employed people increased by 171,000 in April, year-on-year. The number of new jobs had increased by only 19,000 in January – but then expanded dramatically to 263,000 in February and 250,000 in March.
The employment rate in April posted 66.5% – a fall of a tenth of a percentage point from a year earlier. Unemployed persons rose by 84,000, year-on-year, reaching 1,245,000 for a 4.4% rate. The unemployment rate rose markedly in April due to a rescheduled civil service exam.
Despite the job creation month-on-month slowdown from March, the April data raise expectations that Korea’s unemployment rate is exiting the doldrums. According to the latest figures, growth so far this year exceeds the government’s stated goal of an average of 150,000 new jobs per month.
Even so, jobs remain an Achilles heel of the Moon Jae-in administration, which has made employment a priority. The recent upbeat numbers are boosted by a base effect from last year’s disastrous employment growth. (A base effect is a distortion in a monthly figure that results from abnormally high or low levels in the year-ago month.) Also factors are governmental fiscal spending (as opposed to an organic expansion) and, lastly, a rise in tourist numbers.
For the whole year of 2018, Korea added only 97,000 new jobs.
At the top end of the economy, last year’s dire numbers were due to the troubled shipbuilding sector and sluggish sales of Korean automobiles. At the bottom end of the economy, steep increases in the minimum wage prevented small businesses from hiring.
A mixed outlook
Service sector numbers continued upward, with a 253,000 net increase. Among these were 127,000 new jobs in the health and welfare sector, 55,000 in education, 49,000 in professional science and 44,000 in the information and communications sectors.
The number of employed in the lodging and restaurant businesses also increased by 42,000, bouncing back from earlier in the year as more and more foreign tourists arrived.
But there were falls in other sectors including two core areas of the economy: manufacturing and construction.
The number of employed in manufacturing fell by 52,000, continuing a decline, although the numbers were eased as restructuring in the troubled shipbuilding industry neared its end. A job increase in the chemical product industries also helped ease job falls in manufacturing.
Those employed in construction declined by 30,000, partly due to bad weather in the month and also due to a falling volume of new apartments.
Employees in the wholesale and retail sectors decreased by 76,000, indicating that domestic consumption is still sluggish.
“It is meaningful that the number of job losses in the manufacturing sector is easing and the number of jobs in the lodging and restaurant businesses has increased for three consecutive months,” Finance Minister Hong Nam-ki, said on Wednesday.
President Moon was also upbeat on job growth in a recent TV interview.
The government has drawn up an extra budget worth 6.7 trillion won ($5.6 billion). The supplementary budget includes measures to support livelihoods and regional economies, which should generate jobs.
“The government’s extra budget could increase the number of employed,” Lee Sang-jae, an economist at Eugene Investment & Securities, told Asia Times. “However, the government’s role in creating jobs is limited, and job growth in the private sector based on economic growth is necessary for full-scale employment recovery.”
He added that while the South Korean economy is expected to regain vigor in the second half, the China-US trade dispute remains a major economic risk for the trade-dependent nation.