As far as headline numbers are concerned, South Korea’s job figures for August are not so bad. In fact, the number of employed people went up last month from a year earlier. But beneath the upbeat data lies a problematic trend that continues to keep policymakers on edge.
According to data released by Statistics Korea on Wednesday, the country added 268,000 new jobs in August, increasing the total of employed people to 28.67 million. The new job additions mark a much welcome rebound. In July, the figure was 211,000 new jobs year-on-year, which was the lowest in 29 months.
The country saw the number of unemployed people decline by 41,000 on-year to reach 573,000 in August, resulting in a jobless rate of 2 percent.
On the surface, both new job additions and the unemployment rate seem to be on a solid footing. But a closer look at specific data based on age and sector tells a different story.
By sector, the number of new job additions in the manufacturing sector declined by 69,000 in August, extending a downward trend for eight months in a row. The pace of decline in the manufacturing sector was also the steepest since April when the figure was down 97,000.
The cut in the number of jobs in the manufacturing sector is largely attributed to sluggish exports and the related reduction in production, a sign that the country’s key sector shows no sign of a rebound from the protracted slump.
The job market for the construction sector was gloomy, as well, with new job additions down by 1,000 on-year. There are expectations that the property market may stage a turnaround from the slump thanks to the government’s deregulation measures, but the effect is yet to translate into new job numbers in the construction field.
Another worrisome trend is related to the mismatch in terms of age groups. The growth of new jobs in August was led by those aged 60 and above, which saw new positions jump 304,000 on-year. During the same period, those in their 50s and 30s secured 73,000 and 64,000 new jobs, respectively.
Excluding the figures for those aged 60 and above, the country witnessed a decline of 36,000 new jobs on-year in August -- a reason why the latest numbers should worry policymakers in charge of employment.
The two important age groups -- those aged 15 to 29 and those in their 40s -- suffered a decline in August. The younger generation group’s new job additions declined by 103,000, extending its downward trend for 10 months. New jobs for those in their 40s, which form the backbone of the Korean economy, went down by 69,000, marking a decrease of 14 straight months.
The weakening job figures for the crucial groups along with the sluggish demand from the manufacturing sector should be taken seriously for the government, particularly concerning the worsening quality of new jobs.
Given that new job additions are largely in those care-giving services, restaurants and accommodation facilities, it is presumed that those jobs are mainly for low-paid and senior workers. The number of temporary workers -- those employed for less than 36 hours -- also jumped by over 10 percent, signaling that the overall employment situation remains unstable for many jobseekers.
The decrease in high-quality jobs is closely related with weak exports and fragile domestic demand, a warning sign for a faltering economic momentum. Hit by the prolonged economic slump, six in ten companies in the top 500 ranking reportedly do not have a plan to recruit new workers in the second half of this year. This suggests the employment rate of the young generation is unlikely to improve soon.
The government said Wednesday it plans to address workforce imbalance. In devising new employment policies, policymakers should consider the importance of sustainable, high-quality jobs for young jobseekers as well as other age groups, and the need for removing a complex web of regulations that stifle innovation and the creation of new jobs.