Major think tanks have predicted cloudier labor market conditions in South Korea for 2015, as businesses are likely to cut hiring on worries that economic recovery may be further delayed, experts said Thursday.
The gloomy outlooks were augmented by the latest job report out Wednesday that the number of employed people increased only 406,000 in October from a year ago, the slowest on-year job growth in four months.
Korea Economic Research Institute, one of the country’s major private think tanks, expected 350,000 jobs to be added next year, which is much lower than 520,000 predicted for this year.
LG Economic Research Institute also cut its job forecast from 580,000 this year to 510,000 for next year, while Hyundai Research Institute (HRI) predicted 400,000 jobs will be added next year, lower than this year’s 480,000.
The outlooks stemmed mostly from expectations that businesses would not expand their employment next year for fear that economic conditions won’t be improving any time soon.
According to a poll of 200 large companies by the Federation of Korean Industries, a business lobby group, nearly one in three said they have reduced their employment plans for this year compared with last year, with only 15 percent saying they have increased hiring.
In particular, such large conglomerates as Samsung Electronics, LG Group, Hyundai Motor and POSCO have said that they would be cutting hiring by 300 to 1,000 during the second half of this year from a year ago.
Though many have yet to finalize their recruitment plans for 2015, experts worry that they would not likely change the status quo easily.
The pessimism is based on the fact that economic recovery remains weak and business conditions for many exporters are getting tough. The yen’s continued fall is among many factors that undercuts profits in auto, shipbuilding and chemical sectors, which face fiercer competition from Japanese rivals.
Many firms are now poised to push for business restructuring that would inevitably be linked to reducing payrolls. A recent poll showed that 35.5 percent of companies said that they have restructuring plans.
“This year and next year will be the years for restructuring in the labor market,” said Kim Kwang-seok, a researcher at HRI. “The restructuring efforts will mostly affect the older generations such as baby boomers.”
The government and the central bank are also as pessimistic about the labor market.
Last month, the Bank of Korea expected 450,000 jobs to be created next year, which is less than this year’s 500,000. The finance ministry expected that employment will increase 450,000 next year, the same as this year.
“The job market could face difficulties considering such negative factors as insufficient recovery in domestic demand, the end of the U.S. stimulus efforts, the depreciating yen and slowdowns in growth in Europe and China,” a government official said on condition of anonymity.
A more serious problem might be the “quality” of jobs.
The latest job report showed that the so-called labor underutilization rate stood at 10.1 percent in October, much higher than the headline jobless rate of 3.2 percent.
The underutilization rate, which includes those who currently hold part-time jobs but want full-time work, is deemed to be more accurate in assessing the current labor market situations where people are forced to opt for less stable jobs to avoid prolonged unemployment. (Yonhap)
