COVID-19 Impact: Last Year's Employment Situation Most 'Severe' Since IMF Foreign Exchange Crisis

Korea Economic Research Institute Analyzes Key Employment Indicators for 2020

Source: Provided by Korea Economic Research Institute

[Asia Economy Reporter Kim Heung-soon] Last year’s domestic employment situation was the worst since the 1998 International Monetary Fund (IMF) foreign exchange crisis.

The Korea Economic Research Institute (KERI) under the Federation of Korean Industries announced on the 16th that key employment indicators in 2020 deteriorated to the second worst level since the 1998 foreign exchange crisis, based on an annual data analysis of the Statistics Korea’s Economically Active Population Survey. This compares with past major economic crises such as the oil shock (1984), foreign exchange crisis (1998), credit card crisis (2003), and financial crisis (2009).

According to KERI, the economically active population last year was 28.012 million, down 174,000 from the previous year, the second largest decrease after 1998 (354,000 decrease). Although the population aged 15 and over increased by 281,000, the economically inactive population rose by 455,000 due to the economic downturn. The number of employed persons was 26.904 million, a decrease of 218,000, also the second worst after 1998 (1.276 million decrease). The number of unemployed was 1.108 million, the third highest after 1998 (1.49 million) and 1999 (1.374 million). The unemployment rate was 4.0%, the highest in 19 years since 2001 (4.0%).

Deterioration in Job Quality
Long-hour Workers Decreased by 1.203 Million, Self-employed with Employees Down by 165,000

Job quality also worsened. Last year, the number of employed persons working 36 hours or more per week was 20.112 million, down 1.203 million (-5.6%) from the previous year, the second largest decrease after 1998 (1.65 million decrease). Meanwhile, those working less than 36 hours increased by 554,000 (10.3%) to 5.956 million.

Among the self-employed, those with employees numbered 1.372 million, down 165,000 (-10.8%), the second largest decrease after 1998 (247,000 decrease). The number of self-employed without employees increased by 90,000.

Source: Provided by Korea Economic Research Institute

Aging Workforce
Number of Employed in Their 50s Surpasses Those in Their 40s for the First Time
High School Graduate Jobs Most Severely Affected

By age group, only those aged 60 and over increased employment by 375,000 last year, while youth (15?29 years) decreased by 183,000, those in their 30s by 165,000, 40s by 158,000, and 50s by 88,000. Since 2004, the 40s age group had the largest share of employment, but last year, for the first time, the number of employed persons in their 50s (6.356 million) surpassed those in their 40s (6.346 million). The employed population aged 60 and over (5.076 million) also exceeded youth employment (3.763 million), approaching the level of those in their 30s (5.364 million).

Among jobs by education level, high school graduate jobs deteriorated the most. Last year, the number of unemployed decreased by 1,000 for college graduates and above, increased by 7,000 for middle school graduates, but rose by 32,000 for high school graduates, accounting for about 70% of the total increase in unemployed persons. The employment rate fell by 0.8 percentage points to 60.1%, with a 0.7 percentage point decrease for college graduates and above, 0.4 percentage point decrease for middle school graduates, and a 1.9 percentage point drop for high school graduates, more than twice the overall decline.

Record High ‘Just Resting’ and ‘Stopped Job Search’
Youth Suffered the Most

Last year, the economically inactive population was 16.773 million, up 455,000 from the previous year, the largest increase in 11 years since 2009 (494,000 increase). Among them, the number of people ‘just resting’ increased by 282,000 to 2.374 million, the highest since statistics began. The number of discouraged job seekers also reached a record high at 605,000 (an increase of 73,000).

Among the economically inactive population, the increase was particularly large in the 20s age group. The overall increase rate of economically inactive population last year was 2.8%, but for those in their 20s it was 7.5%, 2.7 times higher; the overall increase rate of ‘just resting’ was 13.5%, but for those in their 20s it was 25.0%, 1.9 times higher.

The expanded unemployed population, including official unemployed and potential unemployed, was 4.069 million in 2020, an increase of 553,000. The expanded unemployment rate rose by 1.8 percentage points to 13.6%, both indicators reaching their highest levels since statistics began in 2015. The expanded unemployed and expanded unemployment rate for youth (15?29 years) were also the highest since statistics began, at 1.212 million and 25.2%, respectively.

Choo Kwang-ho, head of KERI’s Economic Policy Office, said, “As COVID-19 continues to spread and business difficulties persist in companies except for some export sectors, the employment situation worsened severely last year. To improve employment, since there are limits to job creation in the public sector, it is necessary to revitalize the private economy through deregulation and improvement of the business environment to create sustainable quality jobs.”

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