Looming job crisis

Dole payments hit record high in March

A major unemployment crisis is looming in South Korea like other countries amid fears of a worldwide recession caused by the coronavirus pandemic.

A report released by the Ministry of Employment and Labor, Monday, illustrates the grim reality faced by the country, and the dismal outlook for the job market. It was shocking, but the general belief is that the worst is yet to come.

According to the report, the country's unemployment benefit payments hit a record high of 898.2 billion won ($736.4 million) in March, up 40.4 percent from a year earlier. The number of people who filed dole applications in the month rose 24.8 percent year-on-year to 156,000. Considering that the self-employed, freelancers and short-term employees are excluded from these benefits, many more people may have lost their jobs due to the COVID-19 outbreak.

A related report from the Korean Statistical Information Service released on the same day showed job openings in the country fell at the fastest pace in more than eight years in February amid the fallout from the pandemic. The number of job openings stood at 139,485 at the end of February, down from 202,803 last year.

The data indicates layoffs are spreading across the economy as the coronavirus pandemic is hitting Korea Inc. hard. In particular, temporary workers and short-term contractors are most vulnerable to the fallout. A social safety net is urgently needed for these people not to mention extraordinary financial support programs for struggling companies.

Referring to the report from the labor ministry, President Moon Jae-in said Monday the soaring applications for unemployment benefits may represent “the beginning of the pain.” Surely, this is only the latest snapshot of the economic devastation that has resulted from the spread of the coronavirus; the situation may worsen further.

To minimize the fallout, it is important to put priority on helping private enterprises survive the crisis through bold and aggressive support programs. This will be the most effective way of protecting the job market. The government said in the near future it will submit to the National Assembly another supplementary budget plan, which is centered on supporting the labor market and companies hit by the outbreak, in addition to the 11.7 trillion won extra budget plan approved last month. The administration needs to focus on providing support to vulnerable companies in a timely and adequate manner.

In its recent report, the International Labor Organization described the coronavirus pandemic as “the worst global crisis since World War II,” expecting it to wipe out 195 million full-time jobs or 6.7 percent of working hours globally in the second quarter of the year. These will be challenging times for South Korean companies and workers as well, and we should brace for them.