Korea’s labor market is getting worse as more firms are shedding jobs and cutting hiring due to economic difficulties. The situation is so grave that some predict that the unemployment problem will become catastrophic next year.
Downsizing already began in the first half of this year, with financial firms hit by the economic slump shedding jobs on a massive scale. Manufacturing giants were not exempted from the wave of layoffs, as firms such as GM Korea, Hyundai Heavy Industries and Samsung Electro-Mechanics cut their payrolls.
Some of these companies are forced to further reduce their manpower. GM Korea, which axed 300 staff in February, plans to shed more jobs in the form of early retirement as business shows no sign of a turnaround. Banks, securities and insurance firms that have already cut their workforce are facing similar situations.
Reflecting this severe reality, the latest job report showed that the number of employed people increased 406,000 in October from a year ago, the slowest on-year job growth in four months. This was followed by the government’s acknowledgement that the nation’s real employment rate was as high as 10 percent.
Prospects for next year are not bright either. The Korea Economic Research Institute forecast that only 350,000 jobs would be added next year, compared with the estimated 520,000 this year. Two other major institutes also expected that the job growth would be reduced by 70,000 to 80,000. Likewise, the government, which expected that employment would increase 450,000 next year, is considering cutting down the forecast.
These murky forecasts are backed by the moves of businesses cutting back on their hiring plans. Large corporations, some of which have already cut their recruitment plans this year, plan to maintain their austerity in recruitment next year. These include Samsung Electronics, Hyundai Motor Group, LG Group and POSCO.
This in turn darkens the job market outlook for small- and medium-sized enterprises, which make up 87 percent of the nation’s workforce but whose business relies heavily on their larger partners.
Korean firms, big and small, are likely to wade through the mud for the time being, given the unfavorable economic conditions at home and abroad ― like the slow recovery of domestic demand, end of U.S. stimulus efforts, the weak yen and the slowdown of the European and Chinese economies.
This dismal situation calls on the government and businesses to put priority on creating jobs, especially for the youth. In principle, jobs are to be created by businesses, but the role of the government and the political community ― namely the National Assembly ― is no less important.
What they should and can do includes speedy passage of economic-related bills, implementing bolder deregulation and bolstering the services sector, which creates more jobs than the manufacturing industry.
