South Korea Unemployment Rate at 3.5-Year Peak Amid Political Concerns

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Jan 31, 2025 Reading time : 2 min

This December, the unemployment rate in South Korea rose to its highest level in the previous three and a half years. Political unrest spurred by economic uncertainty and a decline in public attitude has been the primary cause of this increase in the unemployment rate. This information was provided by the data that was made public on Wednesday, the day before the Central Bank’s first monetary policy meeting of the year. 

The unemployment rate has climbed to 3.7% on a seasonally adjusted basis. According to Statistics Korea, it marks the highest figure since June 2021 and a major increase from 2.7% in November. 

An increase in the unemployment rate in South Korea

In an alarming trend, the number of individuals who had been employed dropped by 52,000 over the year leading up to December. This decline follows a gain of 123,000 in November. The decline represents the first-ever decrease in employment rate since February 2021. 

The finance ministry noted that the labor market has slowed down because of the weakened consumer sentiment amid political instability. It also points towards a temporary impact from the conclusion of the government employment initiatives. 

Confidence among consumers has plunged to its lowest point since late 2022, while business sentiment has fallen to its weakest over the past four years. This happened mainly because of the unprecedented constitutional crisis going on in the country sparked by the martial law declaration on the 3rd of December by President Yoon Suk Yeol

An economist at iM Securities, Park Sang-Hyun remarked, “While employment isn’t a direct focus for the Bank of Korea, it will inevitably influence the central bank’s monetary policy, as it serves as a trailing indicator of the economic cycle. ” The Bank of Korea is expected to cut interest rates by 25 basis points for the third consecutive meeting on Thursday which is among earlier than previously expected.

Vibha Anand
Posted by
Vibha Anand

Business Journalist

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