Employment Hit by Impeachment Situation…Worst Since COVID-19

Last Year's Employment Growth Halved…"Indicators for January-February Worse"

16,000 Increase in Employment…Below Expectations, Sharp Decline in Construction and Retail Due to Domestic Recession

The significant decrease in the number of employed people last year was largely due to the employment cold wave in the construction and wholesale and retail sectors, which are directly linked to domestic demand. With the slow recovery of domestic demand and the government's activities being restricted due to martial law and impeachment, the employment indicators, which are lagging indicators of the economy, are analyzed to be deteriorating in earnest.

According to the Ministry of Economy and Finance on the 15th, the number of employed people on an annual basis last year was 28,576,000, an increase of 159,000 (0.6%) compared to the previous year. This is below the employment increase (230,000) suggested by the government at the beginning of last year's economic policy direction, as well as the forecast (170,000) announced just two weeks ago in the economic policy direction.

A Ministry of Economy and Finance official explained, "The increase in the number of employed people last year was reduced due to the base effect of employment significantly exceeding the long-term trend in 2022 and 2023," adding, "The December indicators temporarily slowed due to weakened consumer sentiment caused by political uncertainty and the end of direct job projects at the end of the year." In fact, the employment situation worsened towards the end of the year. The increase in the number of employed people, which reached 380,000 in January last year, slowed down every month and decreased by 52,000 in December compared to the same period last year.

The worsening of the employment market directly linked to domestic demand is also cited as a problem. The number of employed people in the construction sector decreased by 49,000 last year, the largest decrease since related statistics were compiled in 2013. Employment also decreased in the wholesale and retail (-61,000) and manufacturing (-6,000) sectors. A total of 110,000 jobs disappeared in the construction and wholesale and retail sectors, which are directly linked to domestic demand.

The employment market outlook is not bright either. The Ministry of Economy and Finance predicts that the increase in the number of employed people this year will be around 120,000, below last year's 159,000. There is also a forecast that the employment market could significantly worsen in December this year. This is because the employment cold wave caused by weakened consumer sentiment due to martial law and impeachment in December last year could be reflected in the December indicators this year.

A Ministry of Economy and Finance official stated, "With great internal and external uncertainties, the base effect of more than 300,000 employed people increasing in January-February last year could constrain employment growth in January-February this year." The increase in the number of employed people in January and February last year was 380,000 and 329,000, respectively.

Acting President Choi Sang-mok emphasized at the National Policy Coordination Meeting and Economic Ministers' Meeting held on this day, "The employment conditions are not easy due to the delay in domestic recovery in sectors such as construction, intensified competition in key industries, and the expansion of the decline in the working-age population," adding, "We will do our best to quickly improve the employment situation."

Reporter Kang Kyung-min kkm1026@hankyung.com