A total of 23,245,000 people were employed last month, a loss of 12,000 from a year earlier and the first such annual contraction since October 2003 when 83,000 jobs disappeared.

Earlier this month the government halved its target for creating new jobs this year to 100,000 because of the global economic recession.

The unemployment rate in December rose 0.2 percentage point from a year earlier to 3.3 per cent.

The youth jobless rate covering those aged 15 to 29 went up 0.3 percentage point from a year earlier to 7.6 per cent in December, the office said.

The poor jobs data is 'only the beginning,' Citigroup economist Oh Suk Tae told Dow Jones Newswires.

'Conglomerates, hammered by (the global downturn) in the last quarter of 2008 will start cutting the number of their employees full-scale, or at least won't hire more people in the near year,' Mr Oh said.

It was clear that Korea is falling into recession and 'the job market will be far worse than now,' the economist added.

The Ministry of Strategy and Finance last week spotlighted a growing risk of recession because of declining exports and weak domestic demand. -- AFP