South Korea has lost the most jobs in two decades and the unemployment rate hit a 10-year high as the businesses slashed hiring amid the COVID-19 pandemic.
The nation shed 628,000 jobs last month compared with the prior year, the 10th straight monthly drop and the most since February 1999.
Restaurants and hotels were the hardest hit, but manufacturing also lost more than 100,000 jobs for a second month, signaling that a recovery in tech exports has yet to translate into increased employment.
Photo: Reuters
The unemployment rate jumped to 4.6 percent, the highest since January 2010.
Economists had forecast a reading unchanged from November last year’s 4.1 percent.
The worst job losses since the late 1990s Asian financial crisis could spur more calls for the Bank of Korea to put increased emphasis on employment in setting monetary policy.
The bank is expected to hold rates at a record low when it meets tomorrow.
The deteriorating labor market also adds pressure on the government and lawmakers to come up with more ways to shore up the economy.
South Korean Minister of Finance Hong Nam-ki said in a statement that difficulties in the labor market are likely to persist through next month and pledged to do more to combat them.
South Korean President Moon Jae-in’s administration plans to give 4.6 trillion won (US$4.2 billion) in cash handouts to millions of South Koreans before next month’s Lunar New Year holiday and front load fiscal spending in the first half of the year.
The damage to the jobs market reflects the tightening of social distancing rules after the country’s daily infection tally last month surged above 1,000.
Curtailed hours for most shops, and the shutdown of karaoke parlors and other businesses have hurt workers in the service sector, especially during the holiday season.
Restaurant and hotels shed 313,000 jobs, roughly double the losses of November last year.
Employment in the manufacturing industry was down by 110,000 workers in the month, a slightly smaller decline than in the previous month, but still worrisome given the economy’s dependence on exports and factory work.
“Manufacturing has been under pressure from greater labor costs even before COVID-19 and the virus only adds to the trouble,” said Sung Tae-yoon, a professor of economics at Yonsei University in Seoul. “An exports recovery isn’t necessarily going to translate into more jobs in the tech sector, which has already automated much of its manufacturing.”
Construction continued to see improving employment, adding 23,000 workers, amid a government push to increase public housing.
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