(Sept 12): Unemployment and jobs growth in South Korea haven’t looked so bad since the wake of the global financial crisis, undermining President Moon Jae-in’s economic agenda.
Data released Wednesday shows the unemployment rate jumping to 4.2%, the highest since early 2010, and much greater than any economists forecast. Jobs growth slumped to just 3,000, also the worst figure in more than eight years.
Moon, who came into office pledging to create jobs and raise incomes for regular workers, has seen his popularity slide, amid criticism that he’s hurting employment by aggressively hiking the minimum wage. Adding to the economic unease is the risk U.S. President Donald Trump may hit car exporters with auto tariffs, even after Seoul agreed to renegotiate its trade deal with the U.S.
The government has attributed problems in the labour market to the fallout from corporate restructuring, as well as challenging demographics that are shrinking the working-age population. Businesses contend hiking minimum wage 16% this year, with another bump of almost 11% to come in 2019, makes job layoffs inevitable. Small business owners in particular, from convenience stores to fast-food franchises, have shed workers.
South Korean bonds climbed and the won fell after jobs figures, which appeared to squash any near-term prospect of the central bank raising interest rates.
Finance Minister Kim Dong-yeon said on Wednesday it would be difficult for the job situation to improve in the short term, adding there was a need to review economic policies and make adjustments if necessary.
The government may adjust the pace and intensity of economic policies that markets and companies have taken issue with, including minimum wage hikes and flexible work hours, he said.