Job data continues to look weak

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Job data continues to look weak

The number of people looking for jobs and those that actually landed one fell by nearly two percent in the first quarter, yet another indicator of the negative effect of this year’s minimum wage hike.

According to data released by the Ministry of Employment and Labor on Monday, the total number of new hires for any businesses with more than five employees fell by 1.7 percent compared to a year ago to 744,000 from January to April in Korea. Those on the job hunt in the same period tumbled by 1.9 percent year-on-year to 834,000.

This is the first time since 2011 that the number of job seekers and new hires in the first quarter fell simultaneously.

An official from the Labor Ministry said the stats are in line with an employment study by Statistics Korea but it is difficult to confirm its correlation with the minimum wage increase.

But industry experts say that the impact of the base wage hike is clear.

“It’s a serious decrease,” said Sung Tae-yoon, a professor of economics at Yonsei University. “In normal conditions, the job seeking population and new hires themselves should show an increase, but the fact that both figures retreated in the past year indicates an abnormality in the labor market.

“While it’s difficult to put the blame on the minimum wage increase entirely, because there are other structural problems in the local labor market, it is without doubt that it had a tremendous effect,” Sung added.

A closer look at the study showed that it was small and mid-sized enterprises (SMEs) in the country - firms with fewer than 300 employees - that suffered in the last year, showing a dichotomy in the local labor market.

The Labor Ministry data showed that the number of job seekers fell 3.3 percent for SMEs year-on-year to 660,000. But people looking to land a job with large companies - firms with more than 300 employees - rose by 3.4 percent from a year ago to 174,000. New hires for SMEs fell 2.9 percent while new hires at big companies rose by the same amount.

The number of positions the companies were unable to fill in the first quarter stood at 90,000, and 90.2 percent or 81,000 of those belonged to SMEs.

For many SMEs, the level of pay they offer isn’t competitive enough for job seekers, the survey showed. For larger companies, competition from other companies and a dearth of applicants that meet their standards were the top two reasons as to why they left some positions vacant.

While companies hired less in the first quarter, many of them said in the survey that they will increase hiring in the second and third quarter.

Particularly, businesses in wholesale and retail, as well as restaurants and lodging - industries considered vulnerable to changes in the minimum wage - said they will increase hiring by 4.1 percent and 8.3 percent from April to September.

“We have to keep in mind that it is the small businesses and restaurants that are hit the hardest by the minimum wage increase,” Sung said. “Franchises have some level of market power, which means they can offset the burden by raising the price of their products, which for the general public would mean inflation.”

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