SEOUL • South Korea's unemployment rate hit an eight-year high last month as mandatory minimum wages rose, adding to economic policy frustrations and political challenges for President Moon Jae-in whose approval rating is now at its lowest since inauguration.
The unemployment rate rose to 4.2 per cent from 3.8 per cent in July in seasonally adjusted terms as the number of unemployed rose by 134,000 people from a year earlier.
This was the labour market's worst performance since January 2010, when the economy was still reeling from the global financial crisis, when 10,000 jobs were lost.
"(The government) will discuss slowing the speed of minimum wage hikes with the ruling party and the presidential office," said Finance Minister Kim Dong-yeon, adding that a short-term recovery in the job market was not expected.
Experts say the uproar over jobs could also cost Mr Moon considerable political capital as he pursues closer ties with Pyongyang, as any good news from an inter-Korean summit may not be enough to offset public discontent over the lack of jobs and soaring housing prices.
More than 60 per cent of respondents in a Gallup Korea poll criticised Mr Moon's handling of the economy, such as his "inability to improve the livelihoods" of citizens.
The labour-intensive retail and accommodation sector, which lost 202,000 jobs last month from a year earlier, was the hardest hit. A total of 105,000 jobs were lost from manufacturing industries. But the agriculture, construction and transport sectors saw a rise in the number of employed, partly offsetting the rise in the number of those laid off.
The overall number of employed people rose by just 3,000 - also the worst since January 2010.
Each month's worsening jobs report has sparked a strong public backlash, with Mr Moon's support fallingto 49 per cent, the lowest since he took office in May last year.
"At this rate, we may not see any gains in the number of employed in September or the month after that," said economist Oh Suk-tae at Societe Generale. He said economists at the Korea Development Institute, a state-run think tank, believed this year's 16 per cent rise in the minimum wage was discouraging employers from hiring.
"The president should be held responsible for this. Nothing could change the trend unless the boss changes his mind about minimum wage hikes," Mr Oh said.
REUTERS
