August jobs report is most dismal yet
New hires in August totaled only 3,000, even worse than July’s 5,000 - and woefully short of the monthly average of 316,000 in 2017.
Workers in their 30s had trouble finding jobs and people in their 40s saw the biggest job losses for their age bracket in 26 years.
According to Statistics Korea, in August, the number of people working amounted to slightly less than 27 million.
The number of unemployed remained above one million for the eighth consecutive month, the first such run since 2000 after massive layoffs caused by the Asian economic crisis.
The total number of unemployed in August was 1.13 million, 134,000 more than a year ago. That’s a 13 percent jump. The newly lost jobs were mostly workers in their 30s through 50s.
The wholesale and retail sectors, which includes supermarkets, convenience stores and other businesses that pay the minimum wage, saw the number of people hired drop 123,000 compared to a year ago, or 3.2 percent less.
The second biggest area of job losses came in facilities management and real estate rent-related businesses, which includes apartment security guards and maintenance personnel. This sector saw 117,000 fewer new jobs compared to a year ago or 8.4 percent drop.
The mighty manufacturing sector, which employs 16.9 percent of all Koreans employed, saw 105,000 jobs disappear. Last month, 127,000 new jobs vanished compared to July 2017.
The lodging and restaurant sector, which also pays minimum wage, saw its number of job losses nearly double compared to the previous month. In August there were 79,000 fewer jobs, which is more than the 42,000 jobs that vanished in July.
Workers in their 40s saw 158,000 jobs disappear, the largest number by age group. This is an increase from the 147,000 jobs lost in July and the largest shrinkage since December 1999, when 259,000 jobs were lost in the wake of the global financial meltdown. These are the same workers who were in their 20s when the Asian financial crisis hit in the late 1990s.
“These are people who entered the job market [for the first time] during the International Monetary Fund crisis when working conditions were unfavorable,” said Bin Hyun-joon, head of the job statistics department at Statistics Korea. “They have been [among all age groups] most heavily affected in every economic crisis.”
Bin said job losses among workers in their 40s are not limited to certain industries.
“When looking at workers in their 40s and 50s, the ratio of those who were only able to finish high school are relatively higher than their younger counterparts,” Bin said. Many have been working in temporary jobs, which are more vulnerable to job losses.
“For people in their 40s, there’s a relatively higher chance of losing their jobs when the job market is unfavorable,” Bin said.
Workers in their 30s saw 78,000 jobs vanish in August, down from 91,000 in July.
For workers in their 50s, 5,000 new jobs were created last month, a sharp drop from 40,000 in July 2017. The only age group that saw an improvement in the job situation was people in their 60s or older, which added 274,000 jobs in August, more than the 251,000 jobs created in July.
The job market has been spiraling downward since a 52-hour work week was adopted in July on top of hikes in the minimum wage, which was raised more than 16 percent at the beginning of this year.
After seeing 334,000 jobs added in January, the figure dropped to around 100,000 a month from February to July. The situation took a sharp downward turn in July.
The disappointing jobs report forced the government to lower its target of new jobs for the end of this year in July from 320,000 to 180,000 - which may not be met.
The Blue House said the disappointing job report reflected an inevitable process the country is going through in overhauling its economic structure.
“It’s a point that comes with the changing of our economic structure,” said Kim Eui-kyeom, the Blue House spokesman, on Wednesday. “We’re going through a difficult time.”
After last month’s report, the government remained optimistic.
President Moon Jae-in, on Aug. 25, said his income-led growth policy is the right path.
“Overall the quantity and quality of jobs have improved, including the number of people employed, the employment rate, the increase in salaried employees and the increase of small businesses with employees,” Moon said.
On the following day, in a meeting with the press, the Blue House policy director, Jang Ha-sung, doubled down the income led growth policy.
The Blue House has repeatedly blamed Korea’s rapidly aging society and its low birth rate for the shrinking new jobs, denying claims that its economic policy - particularly the sharp hikes in the minimum wage - are causing the problems.
Jang said considering Korea’s demographic changes, 100,000 to 150,000 new jobs should be normal per month.
“In 2016 and until early last year, 200,000 to 300,000 new jobs were considered normal, but in the last two years, the working age population has shrunk by 200,000,” Jang said during a meeting with lawmakers on Aug. 22. “As such, it would be difficult to expect 200,000 to 300,000 new jobs monthly as it was in the past.”
The Korea Development Bank, a state-owned think tank, rebuked that assertion. In a report released Tuesday, the KDI claimed that it was difficult to explain the significant drop in new hires in July on population changes and the current economic situation.
“The job statistics can’t be explained with the current economic situation,” said Kim Hyeon-wook, macroeconomic analysis and forecasting office director at the KDI. “It seems the minimum wage and the 52-hour workweek are having a negative influence and acting as a burden on the job market.”
Economy and Finance Minister Kim Dong-yeon, during an economic meeting with other ministers on Wednesday, once again said the government will work with the Blue House and the ruling Democratic Party to slow the minimum wage hike.
BY LEE HO-JEONG [email@example.com]