Korea’s Unemployment Rate Unexpectedly Falls Amid Stimulus
South Korea’s jobless rate unexpectedly fell in June but remained well above levels seen before the pandemic struck.
(Bloomberg) -- South Korea’s jobless rate unexpectedly fell in June, but remained well above levels seen before the pandemic struck, amid government efforts to stimulate the sagging labor market.
The unemployment rate edged down to 4.3% from a 10-year high of 4.5% in May, data from the statistical office showed Wednesday. This was lower than the 4.5% expected by economists in a Bloomberg survey. The nation shed 352,000 jobs, from the prior year, a fourth straight month of declining employment.
The slide in joblessness follows improvement in consumer and business confidence in recent weeks, as well as in export numbers. South Korea’s government has pledged hundreds of trillions of won in spending to revive economic momentum, including funding to help businesses retain workers.
“Government incentives to prevent layoffs are what’s essentially holding together the jobs market,” said Ryoo Jae-woo, an economics professor at Seoul’s Kookmin University. “The headline numbers may be masking what could be a worse situation, and businesses may start letting more employees go should the economy slow further.”
The latest labor market report comes as the government doubled the size of its “New Deal” project, which is focused on creating tech and green-sector jobs, to 160 trillion won ($133 billion). The government aims to create 1.9 million jobs in industries that would foster growth after the pandemic. South Korea set the minimum wage hike at a record-low 1.5% for 2021, a decision that was seen to reflect the challenging business environment as the outbreak persists.
The retail, lodging and restaurant sector was hit hardest with 361,000 jobs shed. Manufacturing lost 65,000 positions while 62,000 jobs were cut in construction. Public service and individual enterprises saw an increase of 64,000 jobs, and agriculture added 52,000 jobs.
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