Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Fear of mass corporate outflow, job loss escalating in Korea
Job seekers gather at a Seoul employment welfare center before the beginning of a briefing on unemployment allowances in this July 15, 2020 file photo. Yonhap
By Lee Min-hyung
By Lee Min-hyung
Major Korean conglomerates' big investment plans for the United States are prompting concerns over the job market here, which critics argue may end up raising the youth unemployment rate unless the government applies appropriate and required measures against possible mass “corporate outflow.”
The country's top-four conglomerates ― Samsung, SK, Hyundai and LG ― are planning to invest up to 44 trillion won ($39.79 billion) in producing semiconductors, batteries and electric vehicles in the world's largest economy. The announcement was made on the sidelines of President Moon Jae-in's first face-to-face summit with U.S. President Joe Biden at the White House last week.
But the planned investment initiatives in the United States does no good in terms of stabilizing the sluggish job market in Korea where more young people are finding it difficult to obtain quality jobs in the fallout from the COVID-19 pandemic, experts said.
According to data from Statistics Korea, the number of unemployed people aged between 15 and 29, here, increased to 425,000 in April, up 52,000, year-on-year. The youth unemployment rate also reached 10 percent, up by 0.7 percentage points during the same period. Korea's 2020 average unemployment rate also reached 4 percent, the highest level since 2001.
“The government is advised to devise specific policy roadmaps to prepare for the possible void due to job losses particularly among the younger age groups,” Sejong University economist Kim Dae-jong said. The reality is fewer companies want to expand their presence in the domestic market because of a string of recent labor policies ― such as the sharp rise in the minimum wage, he noted.
“The economy will show signs of stronger rebound in the latter half of 2021 thanks to the rapid rise in the COVID-19 vaccination rate here. But if companies keep expanding their overseas investment and only maintain the status quo in the domestic market, the local job market will go nowhere, so the authorities need to come up with measures or offer incentives for more companies to invest in the Korean market.”
Bank of Korea (BOK) Governor Lee Ju-yeol presented his worries over lingering concerns on the post-virus job market, saying the central bank would keep watching various employment-related statistical data closely before making any changes in its monetary policy. A recently-released BOK report showed that the natural rate of unemployment has been on the rise for the past decade.
In the report, the central bank estimated the rate to have risen to 3.9 percent in 2020, up from 3.3 percent in 2011. The figure is the unemployment rate which would exist in a healthy economy without spurring inflation. The rise in natural unemployment was due to the number of the long-term unemployed.
“The increase in the natural rate of unemployment resulted from a rise in structural, long-term unemployment due to changes in the economic structure here,” an economist at the central bank said.