The Finance Ministry said South Korea’s economy will create a mere 180,000 jobs this year, down from the 320,000 jobs it forecast in December. That’s the lowest annual increase in years.
“If we do not make efforts to solve the current situation, difficulties in growth and jobs will continue,” the ministry said in a statement.
It announced a set of measures to help generate jobs and raise income for the poor, who along with the elderly have suffered most from the sluggish hiring environment. That includes increasing benefits, welfare and jobs for senior citizens, expanding unemployment benefits and boosting stipends for young people looking for their first jobs.
The official growth forecast was lowered to 2.9 percent for this year from the 3.0 percent forecast in December.
The revisions were widely expected since the ministry’s earlier forecasts were seen as too optimistic.
Monthly jobs reports show that since February, the country has added slightly more than 100,000 new jobs each month over a year earlier. In June, South Korea added 106,000 jobs, compared with the 302,000 jobs added in June 2017.
The government partly blamed the shrinking population for the somber job market. Economists said the data show the economy is expanding without adding many jobs.
Slashing the employment outlook nearly by half could hurt Moon, who has been enjoying high approval ratings thanks to his administration’s diplomacy toward North Korea.
Moon’s economic policies have centered on increasing income and creating jobs, but the decline of labor-intensive industries like auto manufacturing and shipbuilding has hindered those efforts.
The best performing industry, semiconductor manufacturing, has thrived thanks to strong global demand for high-performing smartphones and data centers but it is highly automated and so tends to create few jobs.
“We are getting closer to a world where we need microchips but we don’t need humans,” said Chung Chang-won, an analyst at Nomura Securities.
By YOUKYUNG LEE, AP Business Writer, Associated Press