You are here
South Korea creates just 5,000 new jobs in July, smallest since financial crisis
[SEOUL] South Korea added a mere 5,000 new jobs in July, slowing sharply from 106,000 a month earlier, official data showed on Friday, the smallest increase since January 2010 in the depths of the global financial crisis.
The latest job creation rate is far below the 72,000 reported in in May, which the South Korean finance minister said was a "shock".
July's unemployment rate was a seasonally adjusted 3.8 per cent, up 0.1 per cent from June. Youth unemployment remained high at 9.3 per cent, unchanged from June, overshadowing President Moon Jae-in's efforts on job creation particularly for young people.
The outcome is expected to undermine the popularity of Moon, who has posed himself as a "Jobs President."
His iconic income-led growth, which features less working hours and steep hike of minimum wages, is likely to draw fire as well, for hampering employment.
Employment in the mining and industrial sectors was down 133,000 and manufacturing industries cut 127,000 jobs. Wholesale and retail companies, which are mostly small to medium enterprises, shed 80,000 jobs.
The finance ministy said in a press release that business restructuring and meagre car sales had led to continuous job losses.
Following the release of the data, the ministry said it would employ "all available policy tools" to energise the slow job market.
"First, the government will expand jobs in public sector, since tax revenue has been robust and the government has enough room to spend. Second, the administration is likely to adopt business-friendly policies to facilitate job creation," said Lee Sang Jae, chief economist at Eugene Investment and Securities.
"However, these policies would be effective only in the short term, simply to prevent further deteriorations."
Oh Suk Tae, an economist at Societe Generale in Seoul, said the weak job data would make it "impossible" for the Bank of Korea to raise interest rates at its monetary policy committee meeting on August 31.
"From a common-sense standpoint, board members won't be able to support a rate hike," Mr Oh said. "In addition to external factors including the Turkish crisis, the job data made the monetary decision clear. Based on the trend, my view is the data predicts negative jobs growth in the near future."