[Why Does the Government Say] The Job Market Has Somewhat Improved, But Why Can't I Find a Job?

Why Do Government Statistics and Perceived Unemployment Rates Differ?

On the 12th, job seekers visiting the Seoul Western Employment Welfare Plus Center in Mapo-gu, Seoul, received consultations on unemployment benefits and employment. According to the "July Employment Trends" announced by Statistics Korea on the same day, the number of employed people last month was 27,106,000, a decrease of 277,000 compared to a year ago. This marks the fifth consecutive month of decline, the longest streak in 11 years since the global financial crisis caused an eight-month consecutive decrease from January to August 2009. Photo by Kim Hyun-min kimhyun81@

[Sejong=Asia Economy Reporter Kim Hyunjung] "Although difficulties in the employment market persist, the fortunate thing is that the year-on-year decrease in the number of employed persons has been shrinking for three consecutive months."

On the 12th, after the employment trend for July was announced, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, wrote this on his social network service (SNS) regarding the related indicators. Despite the ongoing adverse effects of the novel coronavirus disease (COVID-19), the decrease in the number of employed persons is shrinking, indicating that the situation has somewhat improved.

First, let's look at the numbers. The year-on-year decrease in employed persons bottomed out in April (-476,000), then was -392,000 in May, -352,000 in June, and -277,000 in July, showing a continuous reduction over three months. The employment situation can clearly be considered improved.

However, in reality, people around often say, "It is getting harder to find a job." Why does this gap between such indicators and the market appear? It is easier to understand by looking at the 'unemployed' criteria used by the Statistics Korea. First, Statistics Korea classifies the population aged 15 and over into three categories: employed persons, unemployed persons, and economically inactive population.

On the 12th, job seekers lined up at the Seoul Western Employment Welfare Plus Center in Mapo-gu, Seoul, to receive consultations for unemployment benefit applications and other services. According to the "July Employment Trends" announced by Statistics Korea on the same day, the number of employed people last month was 27,106,000, a decrease of 277,000 compared to a year earlier. This marks the fifth consecutive month of decline, the longest streak in 11 years since the global financial crisis led to eight consecutive months of decline from January to August 2009. Photo by Kim Hyun-min kimhyun81@

Here, employed persons include those who worked just one hour in a week according to the International Labour Organization (ILO) standards. Even if they are practically unemployed, working so little is considered employment because the ILO defines employed persons as those who worked one hour or more during the survey week for income purposes. The reason for setting the employment criterion at one hour is that one of the purposes of this survey is to create 'indicators.' To measure total production, the total labor input based on the number of employed persons and working hours is needed, and to calculate this, all work performed for income purposes for one hour or more must be identified. Recently, as the employment situation has changed, various employment forms such as short-time work, irregular work, and shift work have appeared, increasing this necessity, according to Statistics Korea.

Then, are all people who did not work considered unemployed? No. The ILO defines unemployed persons as those who did not work in the past week, are able to work if given a job, and have actively sought employment in the past four weeks. The key is whether they have engaged in 'job-seeking activities.' It is not enough to simply intend to work; one must have searched job postings, attended part-time job interviews, or engaged in other job-seeking activities to be classified as unemployed. Those who simply took a break are not considered unemployed in the economically active population survey.

Therefore, an adult who has continuously tried to get a full-time job but failed and is currently working part-time delivering flyers once a week while submitting job applications is classified as employed. The ILO 'priority rule' ensures that people with multiple activity statuses such as employed, unemployed, and economically inactive population are assigned to only one activity status. In labor force surveys, those with employed status are identified first, then unemployed persons among the remaining people, and finally, the rest are considered economically inactive population.

Due to the gap between actual unemployment rates and perceived unemployment rates, the supplementary indicator called Employment Supplementary Indicator 3 was created. Employment Supplementary Indicator 3 is the ratio of the sum of currently working persons plus time-related additional employed persons who think they can work more, official unemployed persons, and potential economically active population to the expanded economically active population. Potential economically active population includes potential employed and potential job seekers, and expanded economically active population is the sum of economically active population and potential economically active population.

This Employment Supplementary Indicator 3 is also called the expanded unemployment rate, and the larger the difference, the greater the gap between the indicator and perceived unemployment rate. As of July, the official unemployment rate increased by 0.2 percentage points year-on-year to 4.0%, but this Employment Supplementary Indicator 3 rose by 1.9 percentage points to 13.8% during the same period. The official unemployment rate and the supplementary indicator differ by more than three times. Especially, the Employment Supplementary Indicator 3 for the youth group (ages 15?29) reaches 25.6%. The official youth unemployment rate is 9.7%, also nearly three times lower.

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