New jobs a rare treat in 2013 as firms trim the fat

Due to the drawn-out recession and a bevy of corporate restructuring, the local job market is expected to experience a significant contraction next year, market observers said yesterday.

LG Economic Research Institute (Lgeri) forecast that 280,000 jobs will be added in 2013, which would mark a 34 percent decline from the 430,000 estimated to have been created this year.

Owing to the increased retirement of baby-boomers, or those born between 1955 and 1963, the local job market saw a spike in the number of self-employed businesses this year. However, this trend is not expected to continue next year.

“As the construction market remains depressed, and exports continue seeing single-digit growth, the number of people able to find manufacturing jobs will decline sharply to around 280,000,” said Kang Choong-gu, a research fellow at Lgeri.

“Companies have been delaying their restructuring plans, but there is a high chance they will be forced to go ahead with these next year as their outlooks worsen and they have to let staff go,” said Lee Joon-hyup, a research fellow at Hyundai Economic Research Institute.

Some businesses have already begun restructuring part of their organizations.

Hyundai Heavy Industries, the world’s No.1 shipbuilder, is encouraging manager-level employees who are over 50 to retire voluntarily. This is the first time in its 40-year history that the shipbuilder has decided to force layoffs by offering up to 400 million won ($366,350) per person as compensation.

According to a survey by Samsung Economic Research Institute, only 7.6 percent of 500 listed businesses said they would hire more people next year. Some 9.4 percent said they would hire fewer people than this year.

“This year’s economic conditions were not reflected in the labor market, but they will affect the market next year,” said Nam Jae-ryang, an analyst at the Korea Labor Research Institute.

“Small businesses, which account for about 90 percent of the local job market, are expected to cut jobs, while an alarming number of the 6 million self-employed will be at risk of going out of business as they face rock-bottom profits.”

The country’s jobless rate stood at 2.9 percent in September, down 0.1 percentage points from 3 percent in August, according to Statistics Korea.

By Song Su-hyun [ssh@joongang.co.kr]