Employment growth in South Korea hit a four-year low last month, with the number of employed people rising by just 120,000.
This sluggish growth highlights ongoing struggles in construction, retail, and manufacturing, as well as extensive restructuring by major corporations like Lotte and SK. These trends have dealt a significant blow to the job market, particularly for workers in their 50s.
According to Statistics Korea’s report on employment trends for November released on Dec. 11, the number of employed people aged 15 and older stood at 28.82 million, up 123,000 from a year ago. However, this marks the slowest November job growth since 2020, when the COVID-19 pandemic caused widespread job losses. The growth rate has remained at this low level for nine consecutive months since March, reflecting a prolonged downturn.
The weak labor market is primarily driven by sluggish domestic demand and slowing export growth in key industries like automobiles. Construction employment dropped by 96,000 from a year earlier, continuing a seven-month decline as the industry grapples with a prolonged slump. Retail and wholesale jobs also fell by 65,000, marking six straight months of losses.
Meanwhile, manufacturing saw a sharp decline of 95,000 jobs, with cuts centered on electronics and apparel. Manufacturing employment has now been shrinking for five months, and November’s drop was the steepest in over a year.
Despite these challenges, the overall employment rate across all age groups in S. Korea was 63.2%, remaining relatively unchanged from the 63.1% recorded a year earlier. Employment rates improved for people in their 30s, 40s, and those aged 60 and older.
However, the rate for workers in their 50s fell to 77.5%, down 0.3 percentage points from a year ago, marking the eighth consecutive monthly decline for this age group. Similarly, employment among those in their 20s fell to 45.5%, down 0.8 percentage points from last November, continuing a seven-month losing streak.
The challenges in the labor market are being exacerbated by aggressive restructuring at some of S. Korea’s largest corporations.
At the end of November, Lotte Group replaced 18 affiliate CEOs and cut 22% of its executive workforce. The group also completed voluntary redundancy programs across its retail-focused affiliates, including Lotte Hotel & Resort, Lotte Duty Free, and Seven-Eleven.
Shinsegae Duty Free, a competitor, initiated its first-ever voluntary retirement program, targeting employees with more than five years of service since the company’s establishment in 2015. Other Shinsegae Group subsidiaries, such as E-Mart, SSG.com, and G Market, also offered similar retirement packages in the second half of the year.
As restructuring intensifies particularly among domestic-focused companies, S. Korea’s average monthly job growth this year has fallen below 100,000. Woo Seok-jin, an economics professor at Myongji University, noted that “retail and wholesale businesses are among the first to cut hiring when economic conditions deteriorate.”
S. Korea’s job market experienced a significant downturn in 2020, as the COVID-19 pandemic led to a monthly average decrease of approximately 220,000 jobs. However, a year later, employment rebounded, with a monthly increase of over 360,000 positions. In 2022, the recovery accelerated even further, with the monthly job growth surpassing 810,000.
Unfortunately, the positive trend was short-lived. Last year, amid a prolonged export slump, the monthly job gains dwindled to around 320,000. This year, the situation deteriorated even more, with job creation plummeting to a mere 179,000.
The contraction in job growth can be attributed in part to downsizing efforts by major corporations, particularly in export-oriented industries such as manufacturing. SK On, facing challenges due to the electric vehicle industry’s temporary demand slump, opened its doors to voluntary layoffs in September this year for the first time since its launch in 2021. SK Group also conducted a significant restructuring, forcing out nearly one-fifth of its executives in recent regular personnel changes.
This can be viewed as a sign that, with global uncertainty heightened by the inauguration of the second Trump administration in the United States, many companies are looking to reorganize.
