Retail and Accommodation & Food Services Hit Hard by 'COVID-19'... 230,000 Young People Lost Jobs

Statistics Korea, March Employment Trends

58% of the Decrease in New Employment is Among Youth... Employment Rate Plummets to the 41% Range

"Employment Indicators are Lagging... The Decline Will Worsen"

Government to Announce Employment Stability Policy Package Early Next Week

[Sejong=Asia Economy Reporters Kwangho Lee, Sangdon Joo, Bokyung Kim] The job indicators for March this year plunged to the worst level since the 2009 global financial crisis because service industries with high face-to-face contact such as retail, accommodation, and food services were hit hard by the impact of the novel coronavirus infection (COVID-19). Approximately 230,000 young people (aged 15-29) working in these sectors lost their jobs. Social distancing measures to prevent COVID-19 infections continue this month, and with the influence of the general elections, there is little room for the employment market to recover. The government plans to hold an emergency economic meeting next week and announce comprehensive countermeasures.

◆ Employment Shock Hits Youth Directly = According to the 'March Employment Trends' released by Statistics Korea on the 17th, the number of employed youth was 3,671,000, down 229,000 compared to the same month last year. Youth accounted for 58.3% of the decrease in new employment among those aged 15-64 (393,000). The decline in youth employment is the largest since January 2009 (-262,000). The youth employment rate fell 1.9 percentage points from a year earlier to 41.0%, marking a decline for the first time in 22 months.

The concentration of the 'employment shock' on youth is due to a significant reduction in employment in industries with high face-to-face contact. In fact, among industry employment, wholesale and retail trade (-168,000, -4.6%), accommodation and food services (-109,000, -4.9%), and education services (-100,000, -5.4%) saw large decreases.

The decrease in new employment was observed in all age groups except those aged 60 and over. Employment among those in their 30s and 50s fell by 108,000 and 75,000 respectively, returning to a downward trend, while the decline among those in their 40s widened from 104,000 in February to 120,000. Although employment among those aged 60 and over had increased by more than 500,000 for two consecutive months, the increase slowed to 336,000.

Temporary leave workers classified as employed but with zero working hours also surged due to COVID-19, rising from 347,000 in March last year to 1,607,000 this March, an increase of 1.26 million (363.4%). This reflects temporary leave across all sectors, including government jobs, aviation, and education services. Statistics Korea estimates this is due to an increase in unpaid leave to prevent COVID-19 spread and the postponement of government senior job projects.

However, despite the decrease in the number of employed persons, the number of unemployed actually declined. This is interpreted as people who lost jobs not being immediately classified as unemployed but reflected as 'resting' in the economically inactive population. Eun Soonhyun, Director of the Social Statistics Bureau at Statistics Korea, said, "In the current situation where face-to-face contact is avoided, people seem to choose to be economically inactive and 'resting' rather than immediately becoming unemployed. Although unemployment rates might be expected to rise, they have decreased partly due to this effect."

What is more concerning is that the decline in employment may steepen further and unemployment may increase in the future. Director Eun said, "Employment is a lagging indicator. Also, working hours tend to decrease on election days, and since April 15, the National Assembly election day, is included in the employment trend survey period, negative effects are expected."

◆ Package Measures to be Announced Next Week = The deterioration of the employment market leads to a vicious cycle of reduced household income → slowed consumption → decreased production and investment → further employment slump. Accordingly, the government has decided to launch an all-out comprehensive response to normalize the employment market. First, it will announce an employment stability policy response package early next week. This package will include ▲ employment retention measures ▲ unemployment measures ▲ emergency and new job creation measures ▲ livelihood stabilization measures for workers in blind spots. Regarding this, the government is considering various ways to increase the level of employment retention subsidies. Proposed measures include ▲ raising the employment retention subsidy for small and medium enterprises from 90% to 100% of leave (temporary leave) pay ▲ raising the subsidy for large enterprises from 67% to 90% of leave pay ▲ increasing the per-worker support limit (currently 1.98 million KRW per month).

The government is also positively reviewing the addition of ground handling and duty-free shop businesses to the special employment support sectors. It plans to expand the employment safety net for special-type workers (such as delivery drivers and private tutors) and increase the number of direct jobs (public jobs) created with budget support.

However, additional budget expenditure is inevitable to implement new employment measures. This is why there are expectations that a third supplementary budget bill will be prepared soon. A Ministry of Employment and Labor official said, "Since the general election is over, it is highly likely that the third supplementary budget will be prepared and submitted to the National Assembly immediately. They will try to pass the supplementary budget in the last extraordinary session before the 20th National Assembly's term ends."

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