South Korea unemployment creeps up to a 9-year high

South Korea’s unemployment rate rose to 4.4% in January on a seasonally-adjusted basis, the highest in nine years with most of the jobless coming from manufacturing and construction sectors.

January’s figure was the highest since the 4.7% rate in January 2010, data from Statistics Korea showed. In December, unemployment rate was 3.8%.

A hike in minimum wages over the last two years have led to a fall in low-paying jobs in construction and retail. From January, a minimum wage gain of 10.9% was implemented, after a 16.0% increase was made for 2018.

For last month, the manufacturing sector saw a loss of 170,000 jobs on a year-on-year basis, followed by the retail sector which lost 67,000 jobs, and the construction sector at 19,000 jobs.

A softer economic growth expected for this year

Last month, the Bank of Korea left its policy rate unchanged at 1.75% as it downgraded the economic growth forecast for this year by 0.1 percentage point to 2.6%.

For the full year of 2018, the South Korean economy grew by 2.7%, matching the 2.7% growth the central bank had expected. Even so, last year’s annual growth was the slowest pace of expansion the country has seen in six years.

The jobless situation adds further pressure on the economy as it continues to cope with falling exports plagued by China’s slowdown.

For this year, South Korea’s central bank expects exports to expand by 3.1%, a step down from the record increase of 3.9% for last year.