SEOUL – South Korea’s finance ministry pledged on Friday (May 15) to introduce more measures to minimise the employment shock from the coronavirus pandemic, saying risks to the economy were intensifying as domestic and global demand slump.
The country’s unemployment rate was unchanged at 3.8 per cent in April, but the number of employed fell at its fastest pace in more than two decades, data showed on Wednesday, as efforts to contain the health crisis shut businesses and reduced social activity.
Analysts say the toll may be higher than the official figures suggest, with many workers having their hours cut or being put on temporary leave. While anti-virus measures are being relaxed, fears of a second wave of infections are likely to mean companies will remain cautious about new hiring and spending.
“Downside risks to the (South Korean) economy have expanded, with sluggish labour conditions continuing on weak domestic demand, while the exports contraction worsened on the Covid-19 impact,” the ministry said in its monthly assessment of the economy.
“The ministry will focus on preparing measures to cope with the virus crisis and to respond to the employment shock with grave awareness on the economic situation,” it added.
Recent indicators have suggested that Asia’s fourth-largest economy is at growing risk of falling into a recession.
The government plans to urgently create more than 550,000 jobs, and protect the self-employed and those in temporary jobs.
The ministry also said in the statement that sluggish sales in department and discount stores and a sharp decrease in Chinese tourists would weigh on April service and retail sales data.
South Korea’ March service sector output shrank a seasonally adjusted 4.4 per cent from a month earlier, the worst since data releases began in 2000. It contracted 3 per cent in the first quarter, while the retail sales during the same period also shrank 6.4 per cent quarter-on-quarter, the ministry data showed.
Exports and imports suffered a precipitous decline in the first 10 days of May. Policymakers worldwide are bracing for the worst global recession since the Great Depression.