Finance Minister Bahk Jae-wan described the October job data as an “employment jackpot.” On the surface, the minister’s description is justified ― according to Statistics Korea, the economy gained 501,000 more jobs last month compared with a year ago, while the jobless rate fell to 2.9 percent.
The job growth in October is notable as it more than offset the on-year population growth of 454,000. The gain was the largest since the economy added 586,000 in May 2010. Bahk valued the October gain more this time because the sharp growth 17 months ago was due largely to the jobs created in the public sector to stimulate the economy.
The sudden job boom last month raised the employment rate to 59.9 percent, an improvement of 0.5 percentage point compared with a year ago, while pulling the unemployment rate below 3 percent. It was the first time since November 2002 that the rate was below 3 percent.
An unemployment rate of 3 percent generally implies the economy is close to full employment, a state pursued by economic policymakers the world over. But it would be far-fetched to say that the nation’s economy has reached full employment.
As has been often pointed out, the nation’s unemployment rate is too narrowly defined to depict reality. More than anything else, the government needs to define it more broadly. Otherwise the unemployment rate will continue to convey meaningless data.
For instance, the job data put the unemployment rate among those aged 15-29 at 6.7 percent last month, up 6.3 percent from a month earlier. But this rate grossly underestimates the real situation. We still hear that many younger people have difficulty locating a job.
One notable feature of the job data was the increase in self-employed people. Since May 2006, the number of own-account workers had been on the decline, reflecting the stagnant growth of domestic demand amid worsening economic polarization.
Yet the figure increased 107,000 last month, the third consecutive monthly gain. This probably reflected the startup boom among retiring baby boomers. People born between 1955 and 1963, who total 7.1 million, began to retire in droves last year, with many going into business on their own.
The October data showed the retail and wholesale sector, the most preferred area of business among retired people, gained 128,000 jobs. This sharp increase should be taken with caution. Too many entrants in this sector at a time when domestic demand remains sluggish would spell trouble.
