South Korea unemployment surges after minimum wage hike

SEOUL, April 11 (UPI) — South Korea’s unemployment rate rose to a 17-year-high in March, two months after the country implemented its highest minimum increase in 17 years.

Statistics Korea on Wednesday announced the number of unemployed Koreans hit 1.25 million last month, recording a 4.5 percent unemployment rate. It marks the third straight month that the number of jobless people topped 1 million.

The situation was considerably worse for people age 15 to 29, with youth unemployment hitting 11.6 percent, a two-year high for that month.

The number of employed people last month stood at 26.6 million, up 112,000 from a year earlier.
It marked the second straight month of growth confined to the 100,000 range.

Experts say the sluggish growth in jobs is likely due to the steep minimum wage hike introduced in January, as employers feel the pinch of extra labor costs for part-time workers, Chosun Ilbo reported.

The wage floor increased to roughly $7 an hour, a 16.4 percent rise, or the biggest annual increase in 17 years.

Wholesale and retail businesses, as well as the food and accommodation sectors, have seen a substantial decrease in jobs, most of which pay by the hour.

“We can see there is a reduction of jobs for unskilled and simple work, as well as the service sector, which was feared would happen after the 16.4 percent minimum wage hike,” said Yoo Gyeong-joon, a professor at the Korea Institute of Science and Technology and former head of Statistics Korea.

“There’s a large possibility that many self-employed businesses will have to close down as they cannot shoulder the burden of labor costs, and as a result, the unemployment crisis will become even more difficult to resolve,” Yoo said.

The number of self-employed people decreased by 40,000 in March, compared to the year before.

Meanwhile, Statistics Korea says the waning job growth is due to difficulties in the construction sector, and an overall decline in the population.

It added that the numbers appeared to have reduced to do a base effect, as job growth figures last year exceeded 460,000.