Foreign Exchange Crisis-Level Unemployment Crisis... Manufacturing Also 'Staggering' Following Services

Job Seekers Increase as COVID Eases
Private Sector Interviews and Hiring Still Sluggish
Decline in Employment Numbers Slows
Employment Still Declining in All Age Groups Except 60-Year-Olds

[Asia Economy Reporter Kim Hyunjung] The shock to the employment market caused by the novel coronavirus disease (COVID-19) crisis is reaching the level of the 'unemployment disaster' during the International Monetary Fund (IMF) financial crisis. The number of unemployed and the unemployment rate have reached their highest levels in over 20 years since related statistics began, and the impact of COVID-19 is rapidly spreading from accommodation and food services, wholesale and retail, and educational services to manufacturing, which is considered the backbone of the employment market.

According to the 'May 2020 Employment Trends' released by Statistics Korea on the 10th, the number of unemployed last month increased by 133,000 (11.6%) compared to the same month last year, reaching 1,278,000, and the unemployment rate rose by 0.5 percentage points to 4.5%. Both figures are the highest since statistics began in 1999.

◆Why did the number of unemployed increase so much?= The unemployed refers to people who are actively seeking work but cannot find a job, and the unemployment rate is calculated by dividing the number of unemployed by the economically active population. An increase in the number of unemployed and the unemployment rate indicates not only sluggish employment but also an expansion of job-seeking activities. In the case of last month, as the spread of COVID-19 subsided and social distancing measures shifted to everyday life distancing, the number of people resuming job-seeking activities increased, but private sector interviews and hiring remained sluggish.

Jung Dongwook, head of the Employment Statistics Division at Statistics Korea, explained, "Due to social distancing, job searching itself was restricted, so even if people did not work, they remained in the non-economic population such as those resting or giving up job seeking, which had led to a decrease in the number of unemployed. However, with the shift to everyday life distancing and the reduction in the decrease of employed persons in accommodation, food services, and educational services, these people resumed job-seeking activities, increasing the economically active population, which is the main cause of the rise in the unemployment rate."

However, it is difficult to view the current situation merely as a temporary supply-demand gap in the employment market. In particular, the number of people who have given up on employment has increased. The non-economically active population, who are completely excluded from the labor market without job-seeking intentions, was recorded at 16,548,000, an increase of 555,000 compared to the same period last year. Among the non-economically active population, those classified as 'resting' numbered 2,286,000, up by 323,000, and those who have given up job seeking numbered 578,000, up by 39,000. Reflecting this trend, the amount paid for unemployment benefits last month exceeded 1 trillion won for the first time, increasing by 758.7 billion won compared to the previous year to 1.0162 trillion won. New applications for unemployment benefits were 111,000, an increase of 84,000 compared to the previous year.

On the 10th, citizens visiting the Seoul Employment Welfare Plus Center in Jung-gu, Seoul, are receiving consultations for unemployment benefits applications and employment support. Photo by Mun Ho-nam munonam@

◆Half-hearted improvement in employment indicators= The employment market in May, with the number of employed persons decreasing by 392,000 compared to the previous year, was superficially better than the previous month, which saw a decrease of about 470,000, but it is difficult to see this as a sign of recovery. Except for some sectors such as agriculture, forestry, fisheries, and transportation and warehousing, the number of employed persons continued to decline in most industries, and the decrease in the number of employed persons in the manufacturing sector, considered the backbone of the employment market, actually increased from 23,000 in March to 44,000 in April and 57,000 in May. Jung explained that "the biggest impact was the expansion of the decrease centered on automobiles and trailers due to restrictions on imports and exports caused by COVID-19."

It is also noteworthy that the increase in jobs for seniors aged 60 and over significantly contributed to the improvement in the number of employed persons. When employment numbers are broken down by age group, all age groups except those aged 60 and over (302,000) saw a significant decrease in the number of employed persons.

The 'quality of employment,' which can be gauged by statistics related to weekly working hours, also declined. Short-term jobs working 1 to 17 hours per week increased by 42,000, and those working 17 to 35 hours increased by 578,000, but those working 36 hours or more sharply decreased by 1,696,000. The number of 'solo bosses' (self-employed without employees) increased by 118,000 compared to the previous year. This includes those who laid off existing employees or started as one-person self-employed from the beginning.

The issue now is whether a slow improvement will appear in the future, whether the current situation will become entrenched, or whether it will worsen. The government views the direction of the COVID-19 crisis as more decisive than fiscal job supply. Jung said, "It is difficult to predict the future employment market considering the variable of COVID-19 and the global situation," adding, "We will be able to see which direction the decrease in the number of employed persons will take depending on the increase in COVID-19 confirmed cases and the trend in manufacturing."

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