Despite Lingering Flood Damage... The Employment Market Losing Momentum (Comprehensive)

Statistics Korea Announces July Employment Trends
Deputy Prime Minister Hong Nam-ki: "It is fortunate that the decrease in the number of employed persons is narrowing"

[Sejong=Asia Economy reporters Kim Hyunjung and Joo Sangdon] The employment cliff, where people lose jobs or give up job hunting due to the spread of the novel coronavirus infection (COVID-19), is deepening. The momentum of the job market is fading even before the adverse effects of nationwide heavy rains and floods are reflected. While the government expresses concern over this trend, it also points out that the decrease in the number of employed persons is narrowing, diagnosing that the employment situation is gradually improving.

According to the 'July Employment Trends' released by Statistics Korea on the 12th, the overall expanded unemployment rate last month recorded 13.8%, an increase of 1.9 percentage points compared to the same month last year, marking the highest level since statistics began in January 2015. The expanded unemployment rate is an auxiliary indicator calculated by counting those who want to work regardless of whether they are actively seeking jobs, to reduce the gap between the official unemployment rate and the perceived unemployment rate. It refers to 'effectively unemployed' people who are working but feel they should be working more. The expanded unemployment rate for the youth group (ages 15-29) also rose by 1.8 percentage points to 25.6%, the highest since statistics began. This means that one in four young people should be considered unemployed.

◆ Record High Population 'Resting'... Continued Shock from COVID-19 = Since the COVID-19 outbreak, the overall employment structure has shown a very unstable trend. Employed persons have increased mainly among short-hour workers and elderly public workers, while the population 'resting' and those who have given up job seeking are rapidly increasing.

By working hours, those employed for 36 hours or more numbered 20,671,000, a decrease of 1,101,000 (-5.1%) compared to the same month last year, but those employed for less than 36 hours increased by 585,000 (11.3%) to 5,750,000. Those employed for 1 to 17 hours increased by 135,000 (7.3%). Temporary leave workers, including unpaid leave, decreased in scale compared to the previous month (729,000) but surged by 239,000 (53.7%) compared to last year to 685,000. The economically inactive population, neither employed nor unemployed, was 16,551,000, an increase of 502,000 (3.1%) from a year ago, the highest for the same month since the 1999 statistical revision. Among them, the 'resting' population (2,319,000) was also the highest since statistics began in January 2003. Those who had job-seeking experience within a year and wanted employment but now do not seek jobs, the 'discouraged workers,' numbered 580,000, an increase of 55,000 (10.3%) from last year.

The distorted structure where only elderly employment increases also remains. Looking at employment by age group in July, only those aged 60 and over increased by 379,000, while those in their 30s (-170,000), 20s (-165,000), 40s (-164,000), and 50s (-126,000) all decreased. In particular, the decline in employment among those in their 40s has continued for 57 consecutive months since November 2015.

[Image source=Yonhap News]

◆ Employment Cliff Deepening in Services, Accommodation, and Food Due to Flood Damage = By industry, due to the impact of COVID-19, outings and foreign tourism sharply declined, and the accommodation and food service industry (-225,000 persons, -9.5%) has been decreasing for five consecutive months. Wholesale and retail trade (-127,000 persons, -3.5%) and education services (-89,000 persons, -4.6%) also continued to decline. Manufacturing employment decreased by 53,000 compared to the previous year. However, due to improved export conditions, the decrease was less than the previous month (-65,000). Employment increased in healthcare and social welfare services (161,000 persons, 7.2%), transportation and warehousing (58,000 persons, 4.1%), and business facility management, business support, and rental services (44,000 persons, 3.4%) where demand rose.

The problem is the additional employment cliff expected across various sectors such as construction, wholesale and retail, accommodation and food services, and other service industries due to nationwide flood damage. While the government expresses concern about this, it also tries to interpret positively that, for now, employment conditions in the statistics are improving. Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, said on his social network service (SNS) on the same day, "The difficulties in the employment market have continued since the spread of COVID-19," adding, "The fortunate thing is that the decrease in the number of employed persons compared to the same month last year has been narrowing for three consecutive months since hitting the bottom in April." He also said, "The heavy rains recently are a significant burden factor for the employment situation to be announced next month in August."

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