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South Korea jobless rate hits 22-year high as recovery weakens

(ATF) South Korea’s unemployment surged to its highest level since 1999, raising concerns that recovery from the coronavirus pandemic could be tougher than expected.

The jobless rate jumped to 5.4% in January from a revised 4.5% the previous month to hit its highest level since the aftermath of the Asian financial crisis that began in 1998. 

“Employment fell 982,000 from a year ago, with female employment growth down much more than males,” Khoon Goh, head of Asia research for ANZ, said.

Services jobs, especially temporary workers, bore the brunt. 

“Tighter social distancing rules had a significant effect on employment, especially for face-to-face temporary services jobs,” Angela Hsieh, a Barclays analyst in Singapore, said.

MORE STIMULUS NEEDED

The latest data suggest South Korea’s export-led recovery is not enough to offset weakness elsewhere in the economy.

“The January labour market data was worse than expected,” said Goh. “Strong export growth is not flowing through into jobs yet.” 

Analysts say the government of President Moon Jae-in is not providing enough stimulus.

“[The jobs data] suggest the government’s support measures may need a further boost,” Robert Carnell, head of Asia-Pacific research at ING, said.

The government’s support measures for 2021 include cheap export loans to exporters, public investment spending, and tax credits for credit card spending above certain limits.

The finance ministry has downgraded its forecast for gross domestic product growth in 2021 to 3.2% from 3.6%. 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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