South Korea's Jobless Rate Surges to 3-1/2-Year High in December

The seasonally adjusted unemployment rate in South Korea rose to 3.7% in December 2023, the highest level since June 2021, according to Statistics Korea. This sharp increase, up from 2.7% in November, was driven by political turmoil and economic uncertainty, as reported by Reuters. The number of employed people fell by 52,000 over the 12 months to December, marking the first decline since February 2021.

The rise in unemployment comes amidst a backdrop of political instability, with the impeachment of President Yoon Suk Yeol for his short-lived martial law declaration in December 2023. The Finance Ministry has since downgraded its economic growth forecast for 2025 to 1.8 percent, citing political chaos as one of the key factors dragging down growth. The acting President, Choi Sang-mok, has acknowledged the need for additional stimulus measures to bolster domestic demand and soften the impact from a global trade battle.

The job market trends in South Korea have evolved over the past year, with the unemployment rate increasing despite the automotive industry's strong export performance. The semiconductor industry, however, has faced challenges, leading to a decrease in job openings and an increase in hiring difficulties. The political turmoil has exacerbated these issues, contributing to the rise in unemployment.



The government's announcement of the 2025 growth outlook was followed by a meeting of ministers in charge of economic policies, where the acting President revealed the willingness of the government to implement additional stimulus measures for the economy in the first quarter, if necessary. The government is now open to the option of drawing up a supplementary budget to bolster domestic demand and soften the impact from a global trade battle.

In conclusion, the surge in South Korea's jobless rate to a 3-1/2-year high in December 2023 reflects the challenges faced by the country's economy, exacerbated by political turmoil and economic uncertainty. The government is taking steps to address these issues, with the acting President acknowledging the need for additional stimulus measures to support the economy. As the situation evolves, investors and market participants should closely monitor the developments in South Korea's job market and overall economic growth.