Jobless rate soars to highest in 17 years

By Yoon Ja-young

The unemployment rate rose to its highest level in 17 years in March, with the number of jobs declining in restaurants and hotels following the minimum wage hike.

According to job market data released by Statistics Korea, Wednesday, the number of employed stood at 26.56 million, up 112,000 from a year ago. This compares with January when the year-on-year increase was 334,000.

The number of jobless people, meanwhile, totaled 1.26 million, above 1 million for the third consecutive month. The unemployment rate was 4.5 percent, the highest figure for March since 2001.

“The construction industry used to pull up the number of jobs, but it is seeing decreasing orders and projects. Wholesale and retail businesses are also seeing a decline in jobs, and education too is shedding jobs,” said Bin Hyun-joon, the director in charge of employment statistics at the agency. The number of those working in wholesale and retail dropped 96,000 as automobile sales decreased following the shutdown of GM Korea's plant in Gunsan. Education shed 77,000 jobs with some colleges closing down due to falling enrollment.

The minimum wage hike also seems to have affected the market. The hourly minimum wage is set at 7,530 won this year, which is up 16.4 percent from a year ago. The Moon Jae-in administration plans to raise it to 10,000 won by 2020.

Restaurants and hotels, which are highly affected by the minimum wage, shed 20,000 jobs compared with a year ago. The number of those employed in hospitality has been sliding since last June. “The concern has become a reality. Restaurants are either raising prices or decreasing the number of workers,” the Korea Foodservice Industry Research Institute noted in a report.

The data also showed that youth unemployment continues to be a problem. The jobless rate of those between the ages of 15 and 29 stood at 11.6 percent, which is the highest figure for March since 2016. The “extended jobless rate” of young people, which includes potential jobseekers and those preparing for jobs, was 24 percent.

The economically inactive population totaled 16.29 million. Among them 696,000 were preparing for jobs, up 1.8 percent from a year ago and the highest March figure since the government started compiling such data.

The finance ministry said that it would continue with its policies to create jobs for young people through the supplementary budget plan. Last week the government unveiled a 3.9 trillion won extra budget plan, which aims at creating jobs for the young as well as supporting regions hit by corporate restructuring. The budget needs to be approved by the National Assembly.