By Lee Hyo-sik
Staff Reporter
The job market here will recover to a pre-crisis level early next year, the state-run Korea Development Institute (KDI) projected Tuesday. It means businesses will likely continue to downsize their existing workforce and remain reluctant to hire new employees until the end of this year.
KDI senior economist Moon Hyung-pyo said in a Seoul seminar that the ongoing job market slump is similar to the one after the bursting of the credit card bubble in early 2003.
``More than 200,000 jobs recently disappeared, pushing up the jobless rate to close to 4 percent. The number of jobless will remain high until the nation shows a marked pickup in economic activities,'' said Moon, who also heads the institute's Economic Information and Education Center.
According to the National Statistical Office (NSO), 219,000 jobs disappeared in May from a year earlier, up from a net slide of 188,000 in April. It marked the highest year-on-year job losses since March 1999 when the country lost 390,000 positions as a result of massive corporate layoffs following the 1997-98 Asian financial crisis.
The director said that given past experiences where the labor market rebounded back to the pre-crisis level after one and a half years, employment conditions will likely begin improving in early 2010.
The ongoing global economic slump was largely brought about by the U.S. sub-prime mortgage defaults and the collapse of Wall Street-based financial firms last September. Asia's fourth largest economy is widely expected to grow next year after contracting by 2 to 3 percent in 2009.
``The currently sluggish job market has hit non-permanent workers and the self-employed particularly hard. This is what happened right after the credit card bubble burst in 2003. In contrast, regular workers continue to hold onto their jobs,'' he said.
In May, the number of permanent salaried employees rose by 306,000 from the previous year, while that of non-regular employees decreased by 227,000, with struggling companies targeting them first for layoffs. The number of the self-employed has recently fallen to below 6 million, the lowest since the currency crisis 11 years ago.
Moon said the worsening employment conditions are deepening the wealth gap between the rich and poor, with low-income households usually headed by temporary workers and small shop owners taking the full brunt of the economic downturn.
``Besides cash subsidies, the government should offer more vocational training programs to heads of low-income households, as well as bolster a social safety net for those in unstable jobs and small store operators. A range of social services also needs to be nurtured to create more jobs and deal with the rapidly aging society,'' he said.