SEOUL • South Korea’s economy suffered its biggest month of job losses in more than two decades as businesses slashed hiring to brace themselves for the impact of the coronavirus pandemic.
The number of jobs fell 476,000 last month from a year before that, sliding for a second month as hotels and restaurants slashed employment, data from the statistics office showed yesterday.
A weakening labour market adds to growing challenges for South Korea’s economy. Exports are tumbling as overseas demand dwindles amid lockdowns for major trade partners. The country’s early success in containing the outbreak raised hopes for a swift rebound in consumption that might support the service sector, but that optimism is fading after a resurgence of virus cases this month.
The economy, which shrank 1.4 per cent last quarter, is expected to contract more sharply during the April to June period. South Korea’s daily exports plunged 30 per cent on average in the first 10 days of this month, underscoring the impact of the worsening pandemic.
Despite shrinking numbers of jobs in the past two months, South Korea’s labour market is still holding up better than in places like the United States, where tens of millions of people have lost work and the unemployment rate has jumped to nearly 15 per cent.
Analysts say a tradition of lifetime employment may help limit firings at big South Korean companies.
Last month’s unemployment rate held at 3.8 per cent, while economists had forecast the rate rising to 4.1 per cent.
The jobless rate stayed unchanged because the number of people seeking employment declined amid the labour market gloom, said economics professor Sung Tae-yoon from Seoul’s Yonsei University.
“The economy lost jobs mainly because businesses put off their hiring plans for now,” Professor Sung said. “Joblessness is likely to get worse when they start firing their existing workers, especially with trade worsening in the coming months.”
The biggest job losses last month were among part-time and temporary workers, with employment down by 782,000. Restaurants and hotels shed 212,000 jobs.
The impact of the pandemic is also starting to spill into manufacturing, where 44,000 jobs were lost last month, almost twice as many as in March, the Finance Ministry said in a separate statement, pledging to create 550,000 or more jobs.
THINGS COULD GET WORSE
The economy lost jobs mainly because businesses put off their hiring plans for now. Joblessness is likely to get worse when they start firing their existing workers, especially with trade worsening in the coming months.
ECONOMICS PROFESSOR SUNG TAE-YOON, from Yonsei University in Seoul, on South Korea’s jobless rate.
Overall, the economy lost more than twice as many positions last month compared with the 195,000 in March.
To shield the economy, the government has pledged more than 240 trillion won (S$277.4 billion) in spending.
The focus has been on helping businesses to survive and keep workers, while families have been given cash handouts to spend at smaller stores. President Moon Jae-in has also unveiled a “New Deal” project to increase hiring by boosting technology sectors.