Job market deteriorates to worst level in decade

By Yoon Ja-young

The country's job market fell to its worst level since the global financial crisis, with many sectors shedding jobs. Experts say the Moon administration should focus on the corporate sector instead of pouring money into the public sector to create temporary jobs.

According to Statistics Korea, the number of employed came to 26.86 million in April, up 123,000 from a year ago. The potential for job creation is evidently weakening. The number of newly added jobs has been slightly more than 100,000 for three consecutive months since February when the figure fell from 334,000 posted in January.

It is the first time for the country to see such poor ongoing job creation since the period between 2008 and 2010 when the country suffered from the aftermath of the global financial crisis.

The number of unemployed stood at 1.16 million, with the jobless rate at 4.1 percent. The youth unemployment rate stood at 10.7 percent.

“The job market has been in dismal condition for the past year. This should be enough time for the administration to admit its job policy has been a failure,” said Shin Se-don, a professor of economics at Sookmyung Women's University.

He stressed jobs should come from the corporate sector.

“The corporate sector is not in good condition but the government raised the minimum wage anyway. It also plans to shorten working hours. Because of this, businesses have no option but to decrease employment.”

The country raised the hourly minimum wage to 7,530 won this year, a steep 16.4 percent hike from last year. It is scheduled to reach 10,000 won by 2020 according to President Moon's presidential election pledge. It is part of the Moon Jae-in administration's income-led growth strategy, which expects an increase in household income to lead to more consumption, thereby boosting the economy. The statutory maximum working hours will also be shortened to 52 a week from the current 68 in July.

While the government says the minimum wage hike's impact on the job market is unclear, experts agree the negative impact is evident.

“Any economist would agree rising labor costs coupled with inflexible labor policy were behind the poor figures. Most of the industries that are heavily affected by the minimum wage have shed jobs. The government is sustaining the job figure with public sector jobs, but these are not sustainable,” said Cho Gyeong-lyeob, chief economist at the Korea Economic Research Institute.

Wholesale and retail firms shed 61,000 jobs in April, marking a drop for the fifth month in a row. Jobs at restaurants and lodgings decreased for 11 consecutive months, suffering a 28,000 drop in April.

Adding to this pessimism is that the manufacturing sector also started shedding jobs. The number of workers in the sector dipped 68,000 from last year.

“The administration should stop experimenting with its income-led strategy and slow down the pace of wage increases. It should speed up an innovative growth strategy instead,” Cho said.

Economists urge the government to focus on solving structural problems and nurture new industries instead of spending money to create temporary public jobs. They warn jobs won't recover as long as the administration sticks to its current policy.

“The extra budget for job creation won't help at all. It would simply add subsidies for those who lost their jobs, but jobs will continue disappearing,” Prof. Shin said.