Job Market in Worst Shape Since Currency Crisis
By Lee Hyo-sik
Staff Reporter
Employment conditions are expected to turn from bad to worse in the coming months, with nearly 600,000 new high-school and university graduates set to join the already overcrowded job market.
Companies have been downsizing their workforce, rather than creating new positions, over the past few months amid an increasingly pessimistic business outlook as a result of the ongoing global financial crisis and economic downturn.
A series of upcoming corporate restructuring efforts, involving cash-strapped construction firms and shipbuilders, will likely further tighten the local job market, with an unprecedented public sector reform making it much more difficult for job seekers to find work.
Analysts say job market conditions will hit rock bottom in February and March, calling on the government to introduce more aggressive steps to mitigate the economic slowdown and generate jobs.
According to the National Statistical Office (NSO), the nation's employment rate ― the ratio of workers to the entire economically active population aged over 15 ― reached 57.8 percent in December, the lowest since May 1999 when the world's 13th largest economy was grappling with the aftermath of the 1997-98 Asian financial crisis.
Additionally, the economic participation rate ― the ratio of employees and job seekers to the total population aged over 15 ― fell to a 21-year low of 61.9 percent.
Among the economically inactive population who are neither working nor looking for a job because of housekeeping, childcare, old age, study, health problems or other reasons, people who voluntarily gave up seeking jobs reached 147,000 last month, up 41 percent from a year earlier, mainly because of the tight job market.
The employment conditions will likely worsen for the foreseeable future as nearly 600,000 new high school and university graduates come into the job market in February and March, while there will be fewer new job offerings in both private and public sectors. Many new graduates are widely expected to remain jobless for an extended period of time.
Businesses have been dismissing more workers than they hired to cope with sluggish private consumption and rapidly falling exports. In December, the number of employed totaled 23.24 million, down 12,000 from a year earlier, marking the first annual job loss since October 2003 when the nation lost 86,000 jobs following the bursting of the credit card bubble.
The ongoing corporate restructuring campaign and the public sector reform will drive more workers out of their jobs.
According to the Korea Chamber of Commerce & Industry, two out of every three companies have not finalized how many new employees they will hire this year. Among the 500 largest companies in terms of revenues, 231 decided to add 18,845 employees to their payrolls, down 16.5 percent from a year earlier.
The picture is no brighter in the public sector. The government has decided to freeze the number of civil servants this year, meaning that it will only recruit about 23,800 new employees to replace retirees. The ongoing restructuring drive targeting the country's 305 state enterprises will further dampen job creation in the public sector.
A Seoul analyst said the ongoing economic slowdown is having a more serious impact on the nation's job market because it is a worldwide trend. ``Following the currency crisis, Korea could recover fast by increasing outbound shipments because the United States and other advanced economies were fine. But this time, the entire global economy is suffering, meaning employment and other macroeconomic conditions here will be worse than 10 years ago,'' he said.