Official figures paint a picture of the Korean job market that is far from bleak. On the contrary, Korea appears to be near “full employment,” given the 3.5 percent April jobless rate ― somewhere near an acceptable level of unemployment.
But President Lee Myung-bak’s administration is desperate to create jobs by boosting growth. That points to a problem that cannot be described by the official jobless figures alone. Lying at the core of the problem is hidden unemployment. In other words, so many people that are effectively unemployed are hidden from the official jobless figure.
For instance, a university student may delay his graduation though he has already completed the four-year course because he has little chance of landing a job at the time. He is not officially counted as jobless even though he wants to find work. It is the same with those enrolled in job-training programs.
The official jobless rate was at 3.4 percent last year. According to one study, however, the rate of actual and de facto joblessness more than doubled to 7 percent when hidden unemployment was added.
This is not to say that the administration did not adhere to international standards when it compiled employment figures. Few economists question the validity of the government’s statistical data. Nonetheless, the official figures fail to show the whole picture of the job market.
If unemployment is to be reduced to a tolerable level, if not to that of near full employment, the Lee administration will have to create more than 300,000 new jobs each year, given that the number of new yearly entrants into the labor market ranges from 300,000 to 350,000.
One of the surest ways to provide more jobs is to promote growth. To the chagrin of the Lee administration, however, the worsening economic conditions are thwarting growth.
The nation’s actual growth is most likely to fall below the administration’s 2012 outlook. That is an assessment shared by two international economic agencies ― the Organization for Economic Cooperation and Development and the International Monetary Fund.
The OECD, which has readjusted its 2012 growth outlook for Korea downward on several occasions in the past, slashed a full percentage point in one year ― from 4.3 percent in May last year to 3.3 percent last week. The IMF has also cut the growth outlook, though not as much as the OECD. It lowered the forecast from 4.4 percent last September to 3.5 percent last month.
Minister of Strategy and Finance Bahk Jae-wan appeared to be defiant against those assessments when he maintained last weekend that actual growth was not likely to fall below this year’s growth outlook of 3.7 percent, which was set in December. But he acknowledged that obstacles to growth are formidable. Notable among them are a looming debacle in the eurozone and a slowdown in China and other markets for Korean exports.
A slowdown in growth would be a major setback for the Lee administration, which has committed itself to creating 280,000 new jobs this year. That should be a modest goal, given the need for 300,000 to 350,000 jobs. But the provision of 280,000 jobs is beyond the Lee administration’s reach, if a recent report from the Hyundai Research Institute is correct.
The economic think tank says in its report that Korea needs to generate 4 percent growth if it is to provide 280,000 new jobs. If the Korean economy grows 3.7 percent this year, as projected by the administration, the number of new jobs to be created will fall to 259,000. Worse still, fewer jobs would be created were growth to slow to 3.3 percent, as the OECD predicts.
This setback is even more acute to the Lee administration, which also attempted in vain to promote job sharing by reducing the workweek. Last week, the administration officially abandoned its job-sharing proposal in the face of opposition from employers, who refused to shoulder additional costs, and unionized workers, who rejected a concomitant reduction in wages.
As there is little likelihood that the job market will improve anytime soon, the issue of job creation has to be reserved for debate among those who have set their sights on the December presidential election.
