Severe job losses more than offset export's recovery
The Korean economy has recovered about 80 percent of its vigor from the depths it had plunged to due to the COVID-19 pandemic, according to a recent report. However, it said that the recovery in employment was a mere 25 percent of the pre-coronavirus level. The report attributed this limited recovery to the unprecedented job crisis of last year, when the number of people who lost their jobs because of shutdowns, layoffs and sales downturns, topped 2 million for the first time in the country's history.
The report, published by the Hyundai Research Institute (HRI) and titled the "HRI indices on overcoming the coronavirus crisis," compared the current economic situation with that of pre-pandemic Korea. As of November, the overall economy rebounded to 79.3 percent of its standing before COVID-19. This indicates Korea will have to regain an additional 20.7 percent of its production power to restore the economy to its previous level.
Among the four major sectors of consumption, exports, employment and industrial production, exports fared far better than consumption, and manufacturing demonstrated a more robust recovery than services in industrial production. However, the employment recovery index stood at 25.5, meaning it overcame only a quarter of the employment shock caused by the pandemic. True, employment is a lagging indicator of economic recovery. Still, the extremely slow recovery was due to the employment shock being concentrated in labor-intensive businesses, such as retail and wholesale, food, lodging and educational services.
Nothing showed this better than the fact that 2.19 million people have lost their jobs as of December. This marked an increase of 48.9 percent from 1.47 million in 2019, and reached the record-high level by surpassing the 1.86 million recorded in 2000 when Korea was recovering from the 1997-98 Asian financial crisis, and the 1.78 million in 2009 in the aftermath of the global financial crisis. That explains why the government should focus on restoring employment to maintain the momentum of recovery across the board. One method is to front-load fiscal spending with an emphasis on replenishing public sector employment and preventing job losses in the private sector.
The Korean economy has recovered about 80 percent of its vigor from the depths it had plunged to due to the COVID-19 pandemic, according to a recent report. However, it said that the recovery in employment was a mere 25 percent of the pre-coronavirus level. The report attributed this limited recovery to the unprecedented job crisis of last year, when the number of people who lost their jobs because of shutdowns, layoffs and sales downturns, topped 2 million for the first time in the country's history.
The report, published by the Hyundai Research Institute (HRI) and titled the "HRI indices on overcoming the coronavirus crisis," compared the current economic situation with that of pre-pandemic Korea. As of November, the overall economy rebounded to 79.3 percent of its standing before COVID-19. This indicates Korea will have to regain an additional 20.7 percent of its production power to restore the economy to its previous level.
Among the four major sectors of consumption, exports, employment and industrial production, exports fared far better than consumption, and manufacturing demonstrated a more robust recovery than services in industrial production. However, the employment recovery index stood at 25.5, meaning it overcame only a quarter of the employment shock caused by the pandemic. True, employment is a lagging indicator of economic recovery. Still, the extremely slow recovery was due to the employment shock being concentrated in labor-intensive businesses, such as retail and wholesale, food, lodging and educational services.
Nothing showed this better than the fact that 2.19 million people have lost their jobs as of December. This marked an increase of 48.9 percent from 1.47 million in 2019, and reached the record-high level by surpassing the 1.86 million recorded in 2000 when Korea was recovering from the 1997-98 Asian financial crisis, and the 1.78 million in 2009 in the aftermath of the global financial crisis. That explains why the government should focus on restoring employment to maintain the momentum of recovery across the board. One method is to front-load fiscal spending with an emphasis on replenishing public sector employment and preventing job losses in the private sector.
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