SEOUL—South Korea’s unemployment rate rose to an eight-year high in August as mandatory minimum wages rose, worsening economic policy frustrations for President Moon Jae-in whose approval rating is now at its lowest since inauguration.
The unemployment rate rose to 4.2 percent in August from 3.8 percent in July in seasonally adjusted terms as the number of unemployed rose by 134,000 people from a year earlier.
This was the labor market’s worst performance since January 2010, when the economy was still reeling from the global financial crisis, when 10,000 jobs were lost. The overall number of employed people rose by just 3,000 – also the worst since January 2010.
Each month’s worsening jobs report has sparked a strong public backlash, with President Moon Jae-in’s approval rating falling below 50 percent for the first time on Sept.7.
A weekly Gallup Korea survey released on Sept. 7 showed Moon’s support fell 4 percentage points to 49 percent, the lowest since he took office in May 2017.
“At this rate, we may not see any gains in the number of employed in September or the month after that,” said Oh Suk-tae, an economist at Societe Generale.
Oh said economists at the Korea Development Institute, a state-run think tank, believed this year’s 16 percent increase in the minimum wage – the biggest jump in nearly two decades – was discouraging employers from hiring.
“The president should be held responsible for this, nothing could change the trend unless the boss changes his mind about minimum wage hikes,” Oh said.
The workforce participation rate declined slightly to 63.4 percent from 63.6 percent in July, as more jobs were lost than created, Statistics Korea data showed.
By Shin-hyung Lee