South Korea’s government yesterday dramatically cut its outlook on the job market, while slightly lowering its growth forecast, boding ill for South Korean President Moon Jae-in’s jobs-first agenda.
The South Korean Ministry of Finance said the economy would create a mere 180,000 jobs this year, down from the 320,000 jobs it forecast in December last year and the lowest annual increase in years.
“Growth could slow and poor employment or income distribution are unlikely to improve in the short term,” South Korean Minister of Strategy and Finance Kim Dong-yeon said in a briefing.
“The economic situation could become even more difficult, if the unrest in global trade and financial instability increase due to trade disputes between the US and China and monetary tightening, and if confidence in markets and businesses does not revive,” Kim said.
COUNTERMEASURES
South Korea announced measures to help generate jobs and raise income for the poor as low-income and elderly people were hardest hit by the sluggish jobs market.
That includes increasing benefits, welfare and jobs for senior citizens, expanding unemployment benefits and giving more stipends to young people who are looking for their first job.
The government also plans to give a temporary tax cut to car buyers to boost sales and consumption.
DIMINISHED OUTLOOKS
The official growth forecast was lowered to 2.9 percent for this year, compared with its December forecast of a 3 percent expansion.
The diminished outlooks were widely expected since the ministry’s earlier forecasts were seen as too optimistic.
Monthly jobs reports have shown that since February, the country added slightly more than 100,000 new jobs each month from a year earlier. Last month, South Korea added 106,000 jobs from a year earlier, compared with the 302,000 jobs added in June last year.
The government partly blamed the shrinking population for the somber job market.
Economists said they showed the economy is expanding without adding many jobs.
PRESIDENT’s PERSPECTIVE
Slashing its employment outlook nearly by half could hurt Moon, who has seen high approval ratings thanks to his administration’s diplomacy toward North Korea.
Moon’s economic policies have centered on increasing income and creating jobs, but the decline of labor-intensive industries like auto manufacturing and shipbuilding has hindered those efforts.
AUTOMATED INDUSTRIES
The best performing industry, semiconductor manufacturing, has thrived thanks to strong global demand for high-performing smartphones and data centers, but is highly automated and tends to create few jobs.
“We are getting closer to a world where we need microchips, but we don’t need humans,” Nomura Securities Co Ltd analyst Chung Chang-won said.
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