Will the Employment Boom Continue... Concerns Over 'COVID-19' Setbacks

Statistics Korea Announces January Employment Figures... Highest in 5 Years and 5 Months
Surge Unlikely to Continue Next Month

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Although employment indicators improved significantly last month with a sharp increase in the number of employed persons, concerns have arisen that this 'job wind' may be difficult to maintain until next month. This is because the impact of COVID-19, which began to spread in earnest from the Lunar New Year holiday, is expected to be reflected from this month, likely worsening indicators related to specific industries such as tourism and services. There are also criticisms that, amid the gradual recovery in the manufacturing sector and sluggish employment among those in their 40s, the government’s job programs are virtually the only support available.

The 'January Employment Trends' report released by Statistics Korea on the 12th did not reflect any adverse effects of COVID-19. This is because the statistical survey was conducted between the 12th and 18th, before COVID-19, which intensified after the 25th of last month, impacted the labor market. Although the number of employed persons surged by more than 500,000 for two consecutive months, bringing a favorable breeze to the overall labor market, it is difficult to be overly optimistic.

In particular, the service sector, which has seen employment increase by more than 400,000 each month for the past five months, is expected to be hit hard. The number of employed persons in the service sector increased by 348,000 compared to the previous year, with increases of 508,000 and 468,000 in December and January respectively, maintaining a growth trend for 16 consecutive months. This was partly due to an increase in health and welfare employment (189,000 in January) driven by government-funded jobs, but the recovery of foreign tourists also contributed to the rise in employment in the accommodation and food service sectors. Employment in accommodation and food services, which had increased by 61,000 compared to the previous year, recorded 100,000 in December and rose by 86,000 in January, showing a steady trend. The accommodation and food service sector accounted for 8.7% of total employment last month, ranking third after manufacturing (16.6%) and wholesale and retail trade (13.5%).

However, with the sharp decline in foreign tourist arrivals and domestic travel demand due to COVID-19, deterioration in related indicators is inevitable. The Korea Culture and Tourism Institute estimated in its 2015 report titled 'Impact and Measures of the Middle East Respiratory Syndrome (MERS) Outbreak on the Tourism Industry' that 34,000 tourism jobs were lost due to MERS that year.

The transportation and warehousing sector, which had increased by 92,000 (6.5%) due to the Lunar New Year holiday, is unlikely to maintain last month’s level, and the notably sluggish employment among those in their 40s is also unlikely to improve suddenly this month. Ultimately, the government will have to continue relying on fiscal jobs targeting those aged 60 and over this year as it did last year. Although the government has launched a task force (TF) for jobs targeting people in their 40s, related measures are expected to be announced as early as next month. It will take time for actual improvements in the indicators to appear.

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, commented on the labor market that "the employment recovery trend that has continued since the second half of last year is becoming more robust," but also noted that "the impact of the novel coronavirus (COVID-19, referred to before the name change) may affect employment in sectors such as services going forward." He added, "We will focus all efforts on minimizing economic ripple effects and supporting damage recovery, and fundamentally, we will devote all efforts to strengthening private job creation capabilities through economic recovery and revitalization."

This content was produced with the assistance of AI translation services.