South Korea’s jobless rate surged to its highest in more than two decades, raising concern that an export-driven recovery could be masking a harsher scarring of the economy.
The unemployment rate jumped to 5.4 percent last month from a revised 4.5 percent in December last year, hitting its highest level since after the Asian financial crisis.
The result outstripped all forecasts as the economy shed almost 1 million jobs from a year earlier for the worst losses since 1998.
The sharp deterioration in the labor market contrasts with the view that the South Korean economy has been one of the best performers in the developed world last year and suggests that the South Korean government might need to take more action to support jobs.
“The huge hit to jobs is going to weigh on the pace of economic recovery,” said Sung Tae-yoon, an economics professor at Yonsei University in Seoul. “People looking for jobs will also decrease as the economy worsens, which may technically bring down the jobless rate, but economic difficulties will continue.”
Last month, the sector combining retailers, wholesalers, restaurants and hotels was hit hardest with 585,000 job losses from a year earlier.
More than 340,000 positions were shed in a sector that includes public service, as the government’s job-creation measures expired. Manufacturing lost 46,000 jobs.
The government takes the situation “seriously” and would use all available options to deal with it, South Korean Minister of Finance Hong Nam-ki said in a statement, blaming the job losses partly on expired fiscal support for jobs creation at the turn of the year, and a high year-earlier base.
South Korean President Moon Jae-in is also calling for incentives for companies that would share some of their profits during the pandemic with ones that were hit harder, a move that could indirectly support employment.
Some South Korean lawmakers are putting pressure on the Bank of Korea to adopt a jobs mandate as part of its goals.
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