S. Korea's jobless rate hits 10-year high amid virus wave

SEOUL • South Korea lost the most jobs in two decades and the unemployment rate hit a 10-year high as the country's worst coronavirus outbreak forced businesses to slash hiring.

There were 628,000 fewer jobs last month compared with a year earlier, a 10th straight monthly drop and the most since February 1999.

The jobless rate jumped to 4.6 per cent, the highest since January 2010. Economists had forecast a reading unchanged from November's 4.1 per cent.

The damage to the job market reflects the tightening of social distancing rules after South Korea's daily infection tally surged above 1,000 last month. Curtailed hours for most shops and the shutdown of karaoke parlours and other businesses, where the spread of Covid-19 is more likely, have hurt workers in the service sector, especially during the holiday season.

"No year-end drinking parties and no spending splurge, and you have service workers suffering job losses," said economist An Young-jin at SK Securities. "The tighter social restrictions hurt sectors that would normally see seasonal improvement."

Restaurants and hotels were hit hardest, shedding 313,000 jobs, roughly twice November's losses.

Manufacturing lost more than 100,000 jobs for a second month - 110,000 - signalling that a recovery in technology exports has yet to translate into increased employment.

It was a slightly smaller decline than in the previous month, but still a worrisome sign given the economy's dependence on exports and factory work.

"Manufacturing has been under pressure from greater labour costs even before Covid-19, and the virus only adds to the trouble," said economics professor Sung Tae-yoon at Yonsei University.

"An exports recovery isn't necessarily going to translate into more jobs in the tech sector, which has already automated much of its manufacturing."

Construction continued to see improving employment, adding 23,000 workers.

The ongoing recovery in exports has supported the broader economy, but the job market outlook depends on a successful containment of the latest virus wave and a loosening of restrictions.

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A version of this article appeared in the print edition of The Straits Times on January 14, 2021, with the headline 'S. Korea's jobless rate hits 10-year high amid virus wave'. Print Edition | Subscribe