Real Unemployment Rate Hits 10.36%

By Lee Hyo-sik
Staff Reporter

South Korea has emerged as one of the world's fastest recovering economies from the worldwide economic crisis over the past year. But its job market still remains in a deep slump, keeping low- and middle-income households here from enjoying the ongoing rebound.

University graduates, women, temporary workers and small-business owners have been hit particularly hard by sluggish corporate investment and private consumption.

The government estimates about 1.2 million Koreans are out of work, but in reality, more than three million individuals are "practically" jobless as they have given up looking for work, or are studying or undergoing vocational training for employment.

This means that the official jobless number is much lower than the actual number of Koreans seeking jobs.

Analysts here say that the real labor market is in worse shape than official statistics suggest. A growing number of individuals who abandoned their job search are going back to school or taking temporary positions. They say it will take more time for the job market to recover to the pre-crisis level as companies will begin hiring new workers only after witnessing a visible economic rebound.

According to Statistics Korea, the number of jobless in the nation stood at 1.21 million in January, up from 848,000 a year earlier, with the rate soaring to 5 percent from 3.6 percent. The figure was the largest since February 2000 when 1.22 million Koreans were unemployed.

But if the "practically" jobless - individuals giving up their job search, undergoing vocational training or working fewer than 17 hours a week - are included in the statistics, the jobless rate reached 10.36 percent, the highest since January 2000 when it was 10.75 percent, following the bursting of the information technology (IT) bubble.

The January figure was even higher than the 7.86 percent of December 2008 when the nation was grappling with the international financial market meltdown.

Additionally, Korea's seasonally adjusted jobless rate reached 4.8 percent in January, up from 3.6 percent in December 2009, marking the highest increase among the 22 OECD member economies.

Ireland came in second with its month-on-month unemployed rate jumping by 0.5 percentage point, followed by Hungary and the Czech Republic. But in the United States, the jobless rate fell to 9.7 percent in January from 10 percent the previous month.

"The official jobless number is rather meaningless here because many physically capable Koreans have become economically inactive against their will amid the tight job market.

"The gap between the official jobless figure and the real job market conditions in Korea is much wider than those of other major economies," LG Economic Research Institute economist Lee Geun-tae said.

The statistical office calculates the number out of work by subtracting the nation's entire workforce from the economically active population. The jobless are tallied as part of the economically active population, along with the employed.

Lee advised the government to map out a range of support measures in accordance with a change in the number of the employed and other data that reflect the actual job market conditions. He stressed that the government should do more than it has pledged in recent months, as the nation's labor market continues to remain in a deep slump, in contrast to other sectors of the economy that have recovered rapidly from the economic downturn.

President Lee Myung-bak has pledged to place top priority on creating jobs this year by offering tax incentives to smaller firms and opening more positions in the public sector. The government is aiming at generating at least 250,000 new positions in 2010, up from an initial target of 200,000.

Last Thursday, the Federation of Korean Industries (FKI), a lobbying organization for the nation's large businesses, said its 600 member companies will create a combined three million jobs by 2017 by expanding investments.

In 2009, Korea sustained its largest loss of jobs since the 1997-98 Asian financial crisis, with many businesses downsizing their workforce. The number of workers stood at 23.51 million last year, down 72,000 from 2008, the largest decrease since the nation saw 1.28 million positions disappear in 1998.

leehs@koreatimes.co.kr

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