SEOUL (BLOOMBERG) - South Korea's economy suffered its biggest month of job losses in more than two decades as businesses slashed hiring to brace for the impact of the coronavirus pandemic.
The number of jobs fell 476,000 in April from a year ago, sliding for a second month as hotels and restaurants slashed employment, data from the statistics office showed on Wednesday (May 13).
A weakening labour market adds to growing challenges for South Korea's economy. Exports are tumbling as overseas demand dwindles amid lockdowns for major trade partners. South Korea's early success in containing the outbreak raised hopes for a swift rebound in consumption that might support the services sector, but that optimism is fading after a resurgence of virus cases this month.
The economy, which shrank 1.4 per cent last quarter, is expected contract more sharply during the April-June period. South Korea's daily exports plunged 30 per cent on average in the first ten days of this month, underscoring the impact of the worsening pandemic.
Despite shrinking numbers of jobs in the last two months, South Korea's labour market is still holding up better than places like the US where tens of millions of people have lost work and the unemployment rate has jumped to near 15 per cent. Analysts say a tradition of lifetime employment may help limit firings at big South Korean companies.
April's unemployment rate held at 3.8 per cent, while economists had forecast the rate rising to 4.1 per cent.
The jobless rate stayed unchanged because the number of people seeking employment declined amid the labor-market gloom, said Sung Tae-yoon, an economics professor at Seoul's Yonsei University.
"The economy lost jobs mainly because businesses put off their hiring plans for now," Sung said. "Joblessness is likely to get worse when they start firing their existing workers, especially with trade worsening in the coming months."
The biggest job losses in April came among part-time and temporary workers, where employment was down by 782,000. Restaurants and hotels shed 212,000 jobs.
The impact of the coronavirus is also starting to spill into manufacturing, where there there were 44,000 jobs lost in April, almost twice as many as in March, the Finance Ministry said in a separate statement, pledging to create 550,000 or more jobs.
Overall, the economy lost more than twice as many positions in April compared with the 195,000 in March.
To shield the economy, the government has pledged more than 240 trillion won (S$277 billion) in spending. The focus has been on helping businesses survive and keep workers, while families have been given cash handouts to spend at smaller stores. President Moon Jae-in has also unveiled a "New Deal" project to increase hiring by boosting tech sectors.