Domestic employment indicators have shown favorable results, but an analysis has emerged indicating that the employment environment is deteriorating due to an increase in unemployment stemming from economic slowdown.
The Hyundai Research Institute noted this in a report on Dec. 15 titled "Employment status hidden behind favorable indicators."
According to the report, the domestic economic growth rate after the COVID-19 pandemic contracted by 0.7% in 2020 and rebounded to 4.6% in 2021; however, it gradually slowed to 2.7% in 2022, 1.4% in 2023, and 2.0% in 2024.
However, the unemployment rate recorded a historic low of 2.7% in 2023. The employment rate also reached an all-time high of 62.7% last year.
The Research Institute analyzed statistics from the WorkNet job postings and job seekers from 2022 to 2024 and found that the national unemployed population last year was 3.13 million, similar to the previous year's figure of 3.16 million.
However, upon analyzing the types of unemployment, it was found that the proportion of unemployment due to labor demand shortages (cyclical unemployment) was 71.6%, an increase from 45.5% in 2022 and 56.2% in 2023.
Labor demand shortage unemployment refers to unemployment that arises when total demand decreases during an economic recession, resulting in a reduction in labor demand. This indicates that 70% of unemployment last year occurred due to economic slowdown.
The proportion of structural unemployment decreased from 24.0% in 2022 to 20.5% in 2023, and further down to 8.8% last year.
Structural unemployment occurs when the skills and abilities of unemployed individuals diverge from the skills and abilities in demand in the market due to changes in industrial structure from economic growth, and it has a high likelihood of leading to chronic unemployment.
The proportion of frictional unemployment continues to decrease steadily. It declined from 30.5% in 2022 to 23.3% in 2023 and 19.6% last year.
Frictional unemployment refers to unemployment that occurs when there is a mismatch in working conditions and environments between job seekers and employers due to asymmetric information.
The Hyundai Research Institute said, "As an increase in unemployment due to economic slowdown is being observed in micro employment data, it is necessary to conduct a thorough review of the labor market to improve the actual employment environment and enhance its perception."