Employment index ‘negative’ after 15 months
In the aftermath of sluggish exports of semiconductors, automobiles, and steel, economic activity among the “under 60 years of age” decreased, and the number of elderly employed increased by 91,000. Measures to secure trade routes and supply chains were urgently needed.
Employment in the manufacturing industry, which is the backbone of the Korean economy and the core of employment indicators, is beginning to collapse. This is because exports have been sluggish due to the global economic slowdown. In particular, it was found that the number of jobs under the age of 60, the main age group for economic activity, decreased sharply. The manufacturing employment index, which had been sustained by the expansion of jobs for those aged 60 or older, eventually turned negative for the first time in 15 months.
The National Statistical Office announced on the 21st that the number of employed in the manufacturing industry last month was 4,432,000, a decrease of 35,000 from the same month last year, in the January employment trend. Employment in the manufacturing industry, which was said to have recovered to the pre-Corona 19 level with the lifting of quarantine measures last year, has returned to a downward trend in the new year. It is the first time since October 2021 (-13,000) that the number of employed in the manufacturing industry decreased compared to the same month of the previous year.
As a result of analyzing the number of employed in the manufacturing industry by age group, only those aged 60 and older increased by 91,000 from the same month last year, but all generations under that age decreased. Those aged 15 to 29 fell by 46,000, those in their 30s by 26,000, those in their 40s by 35,000, and those in their 50s by 19,000. It is analyzed that this is because manufacturers increased the employment of senior citizens only for short-term labor positions in order to reduce labor costs.
If you add up the number of people under the age of 60 who lost employment, it reached 126,000. This means that the employment of the core age group, which actually leads the economy, has collapsed to a serious level. In the meantime, the asymmetric increase in jobs for the elderly over 60 has created an optical illusion that prevents them from facing the deteriorating employment situation in the manufacturing industry.
The reason why the employment situation in the manufacturing industry represented by semiconductors, automobiles and steel is deteriorating is because exports, the driving force of the economy, have fallen into a slump in the aftermath of the economic slowdown. A government official said, “It seems that the aftermath of the sluggish exports in the fourth quarter of last year was reflected in the number of employed in the manufacturing industry in January.”
Considering that the aftermath of a decrease in exports is reflected in the job market with a lag of two to three months, the trend of decreasing employment in the manufacturing industry is highly likely to persist for the time being. The Bank of Korea predicted that the total number of employed people, which increased by 816,000 last year, would only increase by around 100,000 this year, shrinking to one-eighth. The Ministry of Strategy and Finance predicted that the economic and employment situation would deteriorate in the first half of the year and then rebound in the second half. In the end, this means that the possibility of manufacturing employment recovering within the first half of this year is slim.
In order to increase the export effect, it is diagnosed that the industrial structure must be changed in the direction of turning manufacturing into a service. Kwon Tae-hyeon, deputy director of the Economic Statistics Department at the Bank of Korea, said, “Since Korea has a high proportion of foreign trade centered on goods with low added value, we are promoting high value-added manufacturing in exports, while increasing the proportion of knowledge services centered on contents such as design, advertising, and software. We need to expand and increase the added value of exports,” he advised.
Diversification of trade routes and supply chains is also considered one of the measures to improve the trade balance to restore employment in the manufacturing industry. The government has begun enacting the Basic Act on Support for Supply Chain Stabilization (Basic Supply Chain Act) for stable trade in semiconductors, core minerals, food, and energy resources. The enactment bill includes the establishment of the Supply Chain Stabilization Committee and the creation of the Supply Chain Stabilization Fund. The Planning and Finance Committee of the National Assembly held a public hearing on the Basic Supply Chain Act and listened to the opinions of experts.
Reporter Sejong Lee Young-joon
