Updated January. 16, 2014 01:22
The jobs market is flashing warning signs. A considerable number of large companies said they will hire less new employees this year. A massive number of people were unable to land a job last year due to record job crunch, which, coupled with the expected sluggish jobs market this year, will cause a major setback to the government`s plan to achieve a 70 percent employment rate. In addition, increasing anxiety among younger people can lead to social instability.
According to the Korea Chamber of Commerce and Industry Wednesday, 243 companies that finalized hiring plans for this year, out of the country`s top 500 companies in terms of sales, will be employing 30,902 people, down 1.5 percent from last year`s 31,372. The Dong-A Ilbo`s survey on employment plans of the top 30 conglomerates also showed that a small number of companies will increase new hiring this year, including Hyundai Motor, SK, GS, Shinsegae, Kumho Asiana and Hyundai Department Store. The number of new jobs available is also discouraging to job seekers. Samsung, which posted record-earnings last year, said it will keep this year`s new hiring at last year`s level (26,000 people). LG, which is struggling in the smartphone market, said it will reduce new hiring by 20 percent. Hyundai that is currently undergoing restructuring, and KT and OCI also said they will cut new hiring. A considerable number of companies responded they will maintain new employees at last year`s level or said they have yet to finalize plans. According to one business source, many companies want to reduce new hiring this year, but are hesitant to do so concerned that they could upset the government and media.
Companies are reluctant due to uncertainty. A source from the commerce chamber said, "Experts expect economic recovery this year, but companies remain unconvinced." A plethora of volatile labor issues, including ordinary wages, extension of retirement age and reduction of working hours, add to the uncertainty. A source from a company whose hiring plans are yet to be decided said, "We are closely watching the follow-up measures of the ruling on the ordinary wage issue. If we come to judge that corporate burden will increase, we will but have to cut new hiring."
Under these circumstances, younger people will have even more difficulty in getting a job. Statistics Korea reported that youth employment rate stood at 39.7 percent last year, the first figure below 40 percent since related data started to be compiled in 1980. Youth unemployment rate rose 0.5 percentage point from a year ago to 8 percent.
Amid bleak employment prospects, the gap between perceived economic data and official ones will likely widen. The Bank of Korea projects the employment-weighted GDP growth rate, which reflects new job conditions of each industry, at 3.4 percent this year, compared with the central bank`s 3.8 percent growth prediction. The gap is the largest since 2011.