Is 3.4 percent jobless figure statistical mirage?

By Kang Seung-woo

While most countries in the world are plagued by a growing jobless rate amid the ongoing global financial turmoil, Korea appears far from the trouble, posting a 3 percent unemployment rate last month, seen as de facto full employment.

Despite the low mark, observers say the statistical office’s way of compiling data does not reflect the realities of the labor market.

According to Statistics Korea on Wednesday, the nation’s unemployment rate was 3 percent in September, unchanged from the previous month, and down from the 3.4 percent recorded the same month a year ago.

In comparison with major countries, Korea stood out in terms of the September jobless rate. The United States stood at 8.8 percent, while France and Germany were at 10 percent and 5.9 percent respectively. Neighboring Japan tallied 4.4 percent.

Based on OECD standards, Korea’s employment rate stood at 63.6 percent, compared with the U.S. reading of 66.8.

Critics say that people polled in the monthly survey for employment trends are divided into three categories: employed, unemployed and economically inactive.

The latter are not considered employed or unemployed and play a key role in decreasing the nation’s jobless rate.

The state-run statistical office defines the unemployed as those who worked for less than an hour during the previous week of its survey; those who actively looked for jobs for four weeks ahead of its poll and those who can start work immediately if they land a job.

However, those studying for employment and civil-service examinations are not counted as unemployed because they did not apply for a job.

“The unemployment survey is, to some extent, estranged from the realities,” said Hwang Soo-kyeong, a fellow researcher of the state-run Korea Development Institute (KDI).

“The poll leaves out those preparing for jobs. However, there are only one or two examinations in a year, so they do not qualify for Statistics Korea’s second and third criteria of being unemployed.”

According to Statics Korea, the number of people preparing for jobs was about 575,000 in September.

Sohn Min-joong, a research fellow of the Samsung Economic Research Institute, said that Korea has many people involved in the agriculture, forestry and fishery sectors, who usually do not seek employment during the off-season and are not counted as out of work.

Korea’s portion in the field accounts for 7.4 percent out of the total employed people in comparison with Japan’s 4.2 percent and 1.4 percent in the United States.

“During the off-season, farmers do not have work to do, but they are counted as economically inactive, not unemployed, which contributes to lowering the nation’s jobless rate,” Sohn said.

He added that the self-employed also help keep the rate at a low level for the same reason.

There is another problem in the calculation of the jobless rate as the office counts those with part-time work or who did private tutoring for more than one hour a week as employed.

“If these cases are included, almost everyone can say they are employed,” Sohn said.

Hwang added that if economically inactive people are included in the unemployment calculation, the rate is likely to soar to 6 to 9 percent.

Critics say that Statistics Korea needs to come up with complementary indicators.

“The nation’s official jobless rate of 2010 was 3.7 percent, but the unemployment sentiment was 8.5 percent,” Rep. Lee Han-koo of the ruling Grand National Party said last month during the parliamentary audit and inspection.

“Statistics Korea should not depend on unrealistic jobless data and must collect figures we can fully agree on.”

Hwang went on to say that the office needs to study hidden unemployment — an unemployment or underemployment of workers that is not reflected in official statistics because of the way they are compiled.