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Staff Reporter
Job creation is about seven times slower than economic growth in Korea, according to the Ministry of Strategy and Finance and the Bank of Korea (BOK) Tuesday. They said employment elasticity ― the job growth rate divided by output growth rate ― fell to an all-time low of 0.15 in the second quarter of the year, down from 0.25 in the same period last year. The lower it is, the fewer jobs the economy generates per unit of growth.
During the April to June period, the economy expanded 4.8 percent from a year ago, while the number of jobs increased only 0.7 percent, meaning job creation is seven times slower.
The latest data showed that the economy's capability to create jobs in proportion to its gross domestic product (GDP) growth has dropped to its lowest level as the industrial structure has become more capital- and technology-intensive, with most labor-intensive industries shifting operations to China and other emerging economies.
Also, high labor costs as a result of the rigid job market and strong protection for full-time workers have discouraged businesses from hiring new employees.
A ministry official said the world's 13th largest economy is creating fewer jobs than in the past, adding benefits of economic expansion do not spread to households from big businesses.
``Korea's industrial structure has transformed into a technology-and capital-dependent one from a labor-intensive one. Manual jobs have largely been moved to China and other Asian economies in which labor costs are much cheaper than here. The economy is expanding without creating as many jobs as it used to,'' he said.
He also said the nation's rigid labor market was another culprit behind falling job numbers as companies have become more reluctant to hire new workers.
Korea's labor elasticity averaged 0.5 in the 1970s and 0.3 in the 1980s. In early 2000 when the economy recovered to some extent from the 1997-98 Asian financial crisis, it stood at about 0.3.
This means that if the economy grew 5 percent in 2000, about 300,000 new jobs were created. But the number was halved to 150,000 this year.
Sohn Min-joong, research associate at Samsung Economic Research Institute, projected labor elasticity will continue to show a downward curve as the Korean economy becomes more capital and technology-dependent, with rising labor productivity in the service sector.
He suggested the government introduce a comprehensive package of measures to help boost domestic demand to create more jobs.
leehs@koreatimes.co.kr
