Value context and insight. lkm@koreatimes.co.kr
Recovery without job growth raises concerns
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By Lee Kyung-min
By Lee Kyung-min
Recent signs of a rebound in exports and consumption should not be blindly welcomed, since a much-awaited economic recovery amid the COVID-19 pandemic will be rendered moot without measures to resolve the year-long devastation of the job market, economists said Sunday.
The concerns follow the number of people looking for work in Korea reaching 853,000 in February, the highest February figure since 2003. Nine out of 10 people seeking work were aged between 20 and 39, demonstrating that young and low-paid people have been hit hardest by virus-inflicted job market woes.
Experts say the latest key indicators strengthen the view that the economy has bottomed out. But as long as jobs remain scarce, the pace of a recovery will largely be limited, because people who are still out of work will find their financial conditions continue to worsen.
More troubling is that economic data in the coming months could deteriorate at any turn due to uncertainties brought on by a possible increase in the number of untraceable coronavirus infections.
Data from the trade ministry showed exports rose 9.5 percent in February, year-on-year, continuing to grow for the fourth consecutive month. Exports averaged $2.3 billion (2.5 trillion won) a day, the highest February figure to date.
The month-on-month growth in exports seen since November of last year is comparable to a boom in outbound shipments seen from December 2017 through March 2018.
The amount of credit spending increased 8.6 percent in February, snapping two consecutive months of year-on-year decrease. Credit spending dropped 3.9 percent in December last year and fell 2 percent in January.
Sales at department stores also jumped 39.5 percent in February, which was the highest increase since 2005 when the ministry began compiling related data.
Hyundai Department Store, for example, saw sales surge 109.8 percent in the first weekend of March, from a year earlier. The figure for Lotte Department Store was 94 percent. Both are strongly recovering to pre-pandemic levels.
Also rising sharply year-on-year are sales at discount stores (24.2 percent) and e-commerce platforms (9.5 percent), with the consumer sentiment index (CSI) rising to 97.4 in February, up from 95.4 in January.
But the job market has yet to display marked growth, although its rapid decline seen over the past few months has slowed. Korea lost 473,000 jobs year-on-year in February, compared to 982,000 lost in January.
The hospitality industry added 98,000 jobs compared to the previous month, the highest figure since 2013 when the statistics agency began compiling such data. The increase of nearly 100,000 jobs is notable because the industry lost 129,000 jobs in December last year and 6,000 in January.
Seoul National University economist Kim So-young said the rebound in exports and private consumption is not enough to paint a rosy outlook.
“Service-related indices can plunge any day, if a spike in the coronavirus infection caseload leads to a heightened level of distancing. Job market recovery will be slow, because it is much harder to find and retain a job than to lose one. Consumption data should be taken with a grain of salt given that a base effect can be at play,” he said.