Worst Korean Jobs Figures in Nine Years Undermine Moon's Agenda
(Bloomberg) -- South Korea’s jobless rate hit the highest level in nine years, adding to evidence that President Moon Jae-in’s minimum wage hikes are doing more to harm employment growth than they are to raise incomes.
The seasonally-adjusted unemployment rate reached 4.4 percent in January, the worst figure since January 2010, when it was 4.7 percent. The median forecast of economists was for 3.8 percent. Meanwhile, jobs growth slowed to 19,000, down from 34,000 jobs in December.
Moon’s administration hiked the minimum wage by 11 percent this year, following a 16 percent increase last year.
What our economist says ...
|"Weakness in the labor market could raise the odds of an extra budget -- even on top of the government’s record budget for 2019," said Bloomberg Economics’ Justin Jimenez. "Weakness persisted in retail and hospitality, manufacturing and business services."|
--For more, read our KOREA INSIGHT.
While few people disagree with the goal of raising wages, the very aggressive hikes have been criticized by business and economists for making it more difficult to employ people. More vulnerable small businesses have been among the most badly affected.
Finance Minister Hong Nam-ki early this month attributed the weak jobs data to the base effect from a larger number of new jobs created a year earlier. Hong’s predecessor Kim Dong-yeon was replaced late last year in a shakeup of senior officials to try to stem a backlash over Moon’s income-led growth policy.
©2019 Bloomberg L.P.