An estimate on the 5th said this year's employment elasticity will be the lowest in eight years. Employment elasticity is the value obtained by dividing the employment growth rate by the economic growth rate. A low employment elasticity means corporations are not hiring much compared with economic growth.
On May 5, Korea Development Institute (KDI) said in its economic outlook that the number of employed people would increase by 170,000 this year. That is a 0.6% increase from last year's 28,769,000 employed people. Dividing that by KDI's projected economic growth rate of 2.5% gives this year's estimated employment elasticity of 0.24. Even when calculated with the Bank of Korea (BOK)'s projections that same month for an increase of 180,000 in the number of employed people and an economic growth rate of 2.6%, the employment elasticity is 0.24. The employment elasticity of 0.24 is the lowest level since 2018 (0.13).
Jobless growth is already being confirmed. The employment elasticity calculated with the first-quarter economic growth rate of 3.8% and the employment growth rate of 0.6% is 0.16. From January to May this year, the year-over-year growth rate of employment among young people ages 15 to 29 was negative throughout. Among all age groups, only those ages 15 to 29 saw employment decline for five consecutive months this year.
Thanks to the semiconductor boom, exports in the first half hit an all-time high of $496.7 billion, but that momentum does not appear to be extending to jobs. Because the semiconductor industry is capital-intensive, its job creation effect is limited.
On top of that, a corporate culture of using artificial intelligence (AI) instead of hiring also appears to have had an impact. According to a report titled "AI diffusion and youth employment contraction" released by the Bank of Korea (BOK) in Oct. last year, from Nov. 2022 to Jul. last year, jobs for young people ages 15 to 29 decreased by 211,000.