Unemployment hits 3.6%, will rise in future
The nationwide unemployment rate rose to 3.6 percent in September, 0.4 percentage points higher than a year earlier, Statistics Korea said Wednesday. It was the highest unemployment rate for a September in 11 years.
The youth unemployment rate, for job seekers aged 15 to 29, rose 1.5 percentage points from the previous year to hit 9.4 percent, an all-time high for September since 1999, which is when the statistics agency started to compile data in its current form.
“The labor market, the manufacturing sector in particular, was weak due to the ongoing corporate restructuring in shipping and shipbuilding industries,” said Kim Ie-han, a director at the Ministry of Strategy and Finance.
The unemployment rate in South Gyeongsang, home to major shipyards, rose 1.1 percentage points to 3.4 percent, and the figure for the southern shipbuilding port city of Ulsan rose 0.5 percentage points to 3.5 percent.
The unemployment rate in Korea’s second largest city of Busan increased 1.4 percentage points to 4 percent.
Sources close to Hyundai Heavy Industries said the shipbuilder is considering carrying out large scale restructuring of 4,300 employees by January and that yearly sales are expected to drop from 25 trillion won ($22.3 billion) last year to 20 trillion won this year, suggesting more layoffs to come.
Data showed that the number of people who found new jobs in manufacturing in September dropped 76,000 compared to the previous year.
“Fewer people are finding jobs in manufacturing due to poor exports and the ongoing corporate restructuring,” said an official at the Finance Ministry. “However, there still is a positive side to the data: more young Koreans are finding jobs even though their general population continues to fall.”
The number of Koreans aged 15 to 29 dropped by 74,000 from a year ago, largely due to the low birth rate. However, the government said more young Koreans are becoming economically active, or willing to get involved in the workforce or find jobs, and that the number of newly hired rose by 41,000 compared to the previous year. The unemployment rate, however, increased for young job seekers, as the number of people who failed to find jobs among the economically active population was still higher than those who got job offers.
A total of 267,000 more Koreans found jobs in September compared to the previous year. The figure was 354,000 in June and has failed to surpass the 300,000 level for the next three months.
The number of people aged 15 to 19 who are working dropped by 4,000, or 19.6 percent compared to the previous year and the figure for people in their 40s fell by 5,000, or 3.4 percent during the same period.
A total of 986,000 Koreans were unemployed as of September, rising 120,000, or 13.9 percent compared to the previous year.
According to Statistics Korea, the unemployment rate for males rose 0.3 percentage points to 3.7 percent, while that of females increased 0.5 percentage points to 3.4 percent.
Exports, which are the lifeblood of the local manufacturing sector, rebounded for the first time in 19 months in August. However, data released by Korea Customs Service on Tuesday showed that exports fell again by 5.9 percent in September compared to the previous year and the figure for the first 10 days of this month fell 18.2 percent year-on-year.
One of the biggest problems is slow automobile exports, which fell 51.9 percent in the first 10 days of this month compared to the previous year. The average figure for the first nine months of the year fell 13.9 percent from a year ago.
Exports of telecommunication products fell 31.2 percent year on year in the first 10 days of this month. Automobiles account for 8 percent of Korea’s total exports and telecommunication products account for 6 percent.
“Korea’s economy might face a big challenge if Samsung Electronics and Hyundai Motor - key contributors to economic growth - start to decline,” said Kwon Tae-shin, president of Korea Economic Research Institute. “The government should come up with various measures, including easing some of the regulatory burdens, to make the country more environmentally friendly for business.”
Sales of Samsung Electronics and Hyundai Motor account for 20 percent of the country’s GDP.
The government has said it will execute a 10 trillion won financial stimulus package, including a supplementary budget, as early as possible to boost domestic consumption along with investments and exports.
“I believe the government has already been working on fiscal policy such as a supplementary budget to boost the economy and that there is more room for the government to expand the budget to help,” said Chun Won-chang, an economist at Shin Young Securities.
“Our firm thinks the Bank of Korea should freeze the key interest rate until January as the United States might increase its rate later this year. I believe these fiscal and monetary policies will definitely help the economy in some ways but don’t think they will be able to solve the whole problem at once.”
Meanwhile, the Korean central bank will announce its outlook for this year and next year today.
BY KIM YOUNG-NAM [firstname.lastname@example.org]