Restructuring weighs on jobs

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Restructuring weighs on jobs


The restructuring of the shipping and shipbuilding industries is already starting to affect the job market.

Although the number of newly employed people in the country grew by 261,000 to 26.45 million workers in May, growth is down compared to a year ago from about an average of 300,000 new workers the past couple of months.

In fact, the unemployment rate in South Gyeongsang, with a regional industry that is mostly ship-related, has risen 1.2 percentage points to 3.7 percent. South Gyeongsang is one of the provinces with traditionally low unemployment rates and is considered one of the richest on the peninsula.

South Gyeongsang’s unemployment rate was the third lowest last year, but it has jumped to the fifth highest this year among 16 major provinces and cities, according to Statistics Korea on Tuesday.

Government officials said unemployment rates are expected to worsen once the large-scale restructuring of the companies kicks off.

“It appears that South Gyeongsang’s rate is rising even though the overall rate for the nation is going down due to the restructuring issues,” Kim Yi-han, a director at the Ministry of Strategy and Finance, said on Tuesday. “We believe the rate for South Gyeongsang will continue to grow for a considerable amount of time, since many shipbuilding companies will precede their restructuring plans.”

In fact, the figure started to grow in January. That month, South Gyeongsang’s unemployment rate rose 0.5 percentage points from the previous year and grew 0.7 percentage points each in March and April.

Among those laid off, the number of employees who worked in the manufacturing industry was significant.

“The number of people working in the manufacturing industry in South Gyeongsang dropped from 439,000 to 413,000 [or by some 6 percent] last month compared to the previous year,” said Sim Won-bo, a director at Statistics Korea. “We can’t say for sure that it is due to the restructuring, but we can say that it might have affected the rate since the number of workers in the manufacturing industry fell rapidly.”

In fact, local shipbuilders are announcing staff reductions.

Samsung Heavy Industries said Wednesday that it will receive applications for voluntary retirement from its employees and reduce the workforce by some 1,500 this year.

Hyundai Heavy Industries has already decreased the number of employees by 13.2 percent this year. The number of employees dropped from 34,300 to 29,773 as of May.

The shipbuilder said it will cut another 3,000 jobs in the near future.

Daewoo Shipbuilding & Marine Engineering will also reduce its workforce, by 25 percent by 2019.

The overall unemployment rate, however, was 3.7 percent in May, down 0.1 percentage points from the previous year. Even though the overall rate has fallen, the government’s data show that the labor market for youth continues to be sluggish.

In May, the unemployment rate for job seekers ages 15 to 29 was 9.7 percent, a drop of 1.2 percentage points from the previous month. The figure has improved from earlier this year, where it remained in the double digits from February to April.

“We believe the labor market will improve as the data for the service industry gets better, but there is a chance that the ongoing restructuring of companies might have negative impacts,” said Kim at the Finance Ministry.

“The government will continue to focus on creating new jobs and improving labor market conditions through various measures such as designating certain regions in the nation as special districts for employment.”

The government provides financial support and eases some regulatory burdens in special districts.

Meanwhile, the employment rate for people ages 15 to 64 rose 0.2 percentage points from the previous year to 66.3 percent in May. It has continued to increase for 36 months in a row and is the highest figure since November 2015.

The overall employment rate for people in their 20s to 40s rose, while it fell for those older than 50. The figure for men dropped 0.3 percentage points to 71.5 percent in May from the previous year, while it rose 0.2 percentage points to 50.8 percent for women.

By sector, there were more people working in the service, hospitality and technology fields. The number of people working in agriculture and retail, on the other hand, has decreased from a year ago.

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