KDI "Next Year Employment Increase of 84,000... One-Tenth of This Year's Level"

[Asia Economy Sejong=Reporter Son Seon-hee] Next year's increase in the number of employed persons is expected to shrink to the 80,000 range, which is one-tenth of this year's level, according to a forecast by a government-funded research institute.

The Korea Development Institute (KDI) released this employment outlook on the 3rd through a report and briefing titled 'Evaluation of Recent Employment Growth and Future Prospects.'

Kim Ji-yeon, head of the KDI Economic Forecasting Office model, stated, "Although favorable employment conditions will continue in 2023, changes in the population structure will turn into a factor reducing the number of employed persons, and due to the base effect, the increase in employment is projected to shrink significantly to 84,000 compared to 2022." This is about one-tenth of this year's increase of 791,000 employed persons.

From the beginning of this year until September, the number of employed persons increased by a total of 890,000. The annual employment increase figure released by KDI (791,000) is about 100,000 less than this. This means that the number of employed persons is expected to decrease in the fourth quarter (October to December).

The base effect on the labor market, which showed an exceptional boom this year, was cited as the reason for the sharp slowdown in employment growth next year. The recent employment upturn is analyzed to have resulted from increased labor demand related to the 'non-face-to-face and digital economy' during the COVID-19 crisis response and adaptation process. Demand for delivery-related personnel rapidly increased, and IT-related jobs due to digitalization are included. On the other hand, face-to-face service industries such as accommodation and retail, which were severely impacted by the COVID-19 crisis, are still experiencing slow employment recovery.

Changes in the population structure, such as the working-age population and population composition ratio, are also expected to turn into a 'negative (-)' factor for the first time starting next year. Kim explained, "As the proportion of the core labor force continues to decline and the working-age population aged 15 and over is expected to shift to a downward trend, changes in the population structure are expected to be a major factor in the future slowdown of employment growth."

However, KDI emphasized that a sharp decrease in the increase of employed persons does not mean that employment conditions are deteriorating. Kim said, "Although the increase in employment next year will shrink significantly, this is mainly due to the base effect and population factors and does not indicate a deterioration in employment conditions."

Nevertheless, since a decrease in the labor force can lead to a decline in economic growth rate, policy efforts to expand labor supply are necessary. Kim, head of the modeling team, suggested, "It is necessary to increase the utilization of currently underutilized labor pools such as women, young elderly, and foreigners, and in the long term, efforts to raise the birth rate should also be made." He emphasized, "It is important to create a culture that supports the combination of work and childcare and improve related systems, encourage labor market participation of young elderly, and actively utilize foreign labor." He added, "Along with quantitative improvement of labor supply, it is necessary to establish a workforce training system that can improve labor productivity and respond quickly to rapidly changing labor demand."

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