Korea
Total employment in the OECD returned to pre-crisis levels at the end of 2021 and continued to grow in the first months of 2022. The OECD unemployment rate gradually fell from its peak of 8.8% in April 2020 to a level of 4.9% in July 2022, slightly below the 5.3% value recorded in December 2019. However, the labour market recovery has been uneven across countries and sectors and is still incomplete, while its sustainability is challenged by the economic fallout of Russia’s unprovoked, unjustified, and illegal war of aggression against Ukraine.
Total employment in Korea has been on an upward path since the beginning of 2021, and surpassed its pre-crisis high in February 2020. The employment rate (aged 15-64) was 68.6% in July 2022, up 3 percentage points from July 2020 and 2 percentage points from July 2021, indicating a rapid recovery. Yet, since May 2022, employment growth has been flat.
The unemployment rate only rose modestly during the crisis to 5.2% in January 2021, and it has since fallen below its pre-crisis level to 2.9% in July 2022 (Figure 1).
Although the overall recovery in the Korean labour market has been rapid, there are differences by sector. Employment growth in some service sectors (e.g. sales, accommodation, food) and for daily workers is lagging behind. In addition, there is increasing uncertainty about the sustainability of the labour market recovery because of greater inflationary pressures and external instability.
Note: Latest month available refers to May 2022 for the United Kingdom and to August 2022 for the United States.
Source: OECD (2022), “Unemployment rate” (indicator), https://doi.org/10.1787/52570002-en (accessed on 2 September 2022).
Vacancies surged to record highs in the OECD area, and reports of labour shortages rose significantly in many industries and countries. Despite this, nominal wage growth remains well below the high inflation induced by the commodity price hikes spurred by Russia’s war of aggression against Ukraine. The decline in real wages is expected to continue over the course of 2022, as inflation is projected to remain well above the negotiated nominal wages for 2022.
Vacancies in Korea has continued to increase with the recovery of labour market since the end of 2021, reaching a slightly higher than pre-crisis level. Labour shortages were especially acute in agriculture, fishery and some manufacturing industries.
The expansion of labour market demand in the aftermath of the crisis, compounded with the highest inflation in the past 10 years (6.0% in June 2022), have exerted upwards pressure on nominal wages in Korea. Nominal wages increased at an annual rate of 7.2% in the first quarter of 2022, while real wages increased by 3.2%. However, the growth in wages in the first quarter was mainly induced by performance pay increases in large firms in automobiles, semiconductors, and financial sectors, which raises concerns about widening wage gaps by firm size and sector. Real wage developments should be closely monitored throughout 2022.
Young people were particularly affected by the initial ravages of the crisis. By Q1 2022, on average across the OECD, young people had recovered much of the lost ground, but were still lagging behind older adults. The employment rate of those aged 15 to 24 years was below pre-crisis levels in a majority of OECD countries and, on average, just at the level of Q1 2019. By contrast, it had increased over the same period by 1 and 3 percentage points, respectively, for adults aged 25-54 and 55-64.
Youth were among the groups the most affected by the crisis in Korea as well. However, since 2021, Korea’s youth employment has recovered more rapidly than for other age groups. By May 2022, the youth employment rate (47.3%) had exceeded its pre-crisis level of December 2019 by 3 percentage points (1 percentage point increase for total workers). The unemployment rate for youth was also well down from its pre-crisis level.
However, despite this rapid recovery, the labour market situation experienced by young job-seekers is still difficult, with labour underutilisation – including involuntary part-time workers and discouraged unemployed – still hovering around 20%. Besides, the rate of inactivity among youth (23.5% in 2021) has remained higher than that of the OECD average (18.1%). Accordingly, Korea has been underpinning youth employment by the reform of the dual structure of the Korean labour market, the expansion of the employment insurance and the development of vocational training with individualised support.
Note: OECD is the unweighted average of 34 OECD countries (not including Colombia, Costa Rica, Israel and Türkiye).
Source: OECD Employment Outlook 2022, Chapter 1.