By Kim Tae-gyu
Staff Reporter
Many indicators demonstrate that economies both at home and abroad are starting to recover from the protracted economic downturn ― with the sole exception of job markets.
This has prompted experts to worry that growth coupled with weak job markets, dubbed a jobless recovery, will weigh on Asia's fourth-largest economy.
"Share prices are rising and property values are strong. A host of other indicators point to recovery. But the job market continues to slump," Korea Development Institute economist Kim Yong-seong said.
"What we are facing now seems to be jobless growth even if we assume that the worst is in the rearview mirror now. Obviously, this is bad news."
The National Statistical Office said this week that Korea Inc. lost a total of 76,000 jobs in July from a year earlier despite a series of public projects aimed at creating work.
The overall workforce has shrunk in eight of the last nine months. As a result, the unemployment rate has soared to 3.7 percent, up 0.6 percentage points from a year ago.
The real state of the job market might be much lousier - more than 170,000 adults gave up the search for work last month, which did not factor in the July unemployment rate, the highest in nine years.
In addition, the young adult jobless rate or the rate for those aged between 15 and 29 has jumped by 1.1 percentage points to 8.5 percent year-on-year.
"While the private sector has failed to generate jobs, the government has contributed to job creation through youth internship initiatives or public employment projects that are estimated to have produced more than 250,000 jobs," Kim said.
"But jobs created by public projects are not permanent and will evaporate in the not-so-distant future. This means the jobless recovery issue might worsen later this year," he said.
Things are almost identical in advanced countries, including the United States.
The jobless rate in the world's biggest economy went down by 0.1 of a percentage point to 9.4 percent back in July for the first time in 15 months.
But the fall came as about half a million citizens stopped the search for jobs, in other words, the decline was the result of an exodus from the labor force. Worse, the unemployment rate is also expected to eventually go through the 10-percent plateau.
"The jobless growth has been ubiquitous in advanced countries over the past decade and the issue is likely to plague them this time around," Korea Labor Institute researcher Hwang Soo-kyeong said.
"A jobless recovery would be costly because society will be required to shoulder the huge number of unemployed citizens. The problem is that it is hard to tackle," she said.
Hwang added that recovery without job creation will not only reduce the number of jobs but also hurt employment security as cost-sensitive employers are highly likely to adopt contractors or outsourcing arrangements rather than add full-time staff in the aftermath of the crisis.