Between 240,000 and 300,000 jobs expected to be created next year
The number of newly employed workers is expected to nearly halve next year in Korea as the recession triggered by the fiscal crises in Europe stretches on, local think tanks and brokerages said.
Sluggish employment growth, especially in the manufacturing sector, could lead to a reduction in consumption, hurting the economy and therefore further exacerbating job insecurity.
About 407,000 people joined the workforce in the first 10 months of this year, and 323,000 throughout last year.
Samsung Economic Research Institute projected an increase of 240,000 jobs next year, attributing the decline in new jobs to the economic slowdown and fewer jobs in the public sector.
Daishin Economic Research Institute forecast an increase of 260,000 jobs, with less hirings by manufacturers.
LG Economic Research Institute had previously conjectured slightly over 200,000, but raised its estimate to between 250,000 and 300,000 on the government’s policy reinforcement to create more jobs.
“Jobs will increase in the health and welfare service area. The employment outlook appears dim if you look at the economy, but the government policy to create social service jobs will have an effect through next year,” Yoon Sang-hwa, a researcher at the LG think tank.
Brokerages were more optimistic, expecting next year’s employment growth to be smaller than this year, but close to last year’s level.
Woori Investment and Securities and Hyundai Securities predicted that a little over 300,000 people will be newly employed.
“The number of jobs in the manufacturing sector will not increase much, but employment growth will continue in the service sector,” Lee Seung-hoon, an economist at Samsung Securities.
If less than 300,000 people join the labor force next year, the overall consumption will shrink, dampening the economy.
“If we maintain annual job creation of over 300,000, there won’t be major problems for the Korean economy. But if it goes below that, we would be worried about a crunch in domestic demand,” Lee Sang-jae, chief economic analyst at Hyundai Securities, said.
Aggravated employment conditions will have a negative impact on the stock market as well due to reduced household incomes and market liquidity.
“Stagnant employment means less disposable income in the private sector. A slowdown in job growth could deal a blow to the stock exchange,” Kim Yoon-ki, chief of economic research at Daishin, said.
By Kim So-hyun
(sophie@hrealdm.com)
