Employment in manufacturing, the sector seen as central to job creation in South Korea, returned to growth for the first time in two years and three months. The government attributes the shift to strong exports finally working their way into the labor market. Still, overall job gains narrowed, and employment remained weak in construction, lodging and food services, and among young people. Because the manufacturing rebound may prove short-lived, analysts say it is too early to call a broad recovery in the labor market.
Manufacturing employment rose by 16,000 from a year earlier in September, according to the September employment trends report released on the 16th by the Ministry of Data and Statistics. It was the first increase in 27 months, since June 2024, when manufacturing added 9,000 jobs. Losses in the sector had reached 140,000 in May before narrowing to 97,000 in June, 68,000 in July and 38,000 in August, turning positive in September.
By subsector, employment rose in chemicals and chemical products, metal processing and other transport equipment, while automobiles and textile manufacturing continued to shed jobs. Semiconductors, buoyed by an export boom, also contributed to the rebound, though the government said the direct effect was somewhat limited because the industry employs relatively few workers for its output. "Improvement across major manufacturing subsectors, combined with some contribution from semiconductors, turned overall employment positive," a ministry official said.
The government said the extended run of export gains has begun to feed through to manufacturing employment. "Exports have been very strong, but the effect on employment was relatively small," said Kim Tae-woong, director of the human resources policy division at the Ministry of Finance and Economy. "The broad strength appears to be materializing in employment with a lag."
Total employment stood at 29.266 million, up 113,000 from a year earlier. The pace of gains had widened from 63,000 in June to 108,000 in July and 184,000 in August before slowing again in September. The employment rate for those aged 15 to 64 was 70.6%, the highest for any September on record. The rate for everyone aged 15 and over, by contrast, fell 0.2 percentage points to 63.5%. The overall unemployment rate declined 0.1 percentage point to 2.0%.
Outside manufacturing, health care and social welfare added 207,000 jobs and transportation and warehousing added 54,000. Lodging and food services lost 97,000 jobs, agriculture, forestry and fisheries 94,000, and construction 48,000. The drop in lodging and food services, a domestic-demand sector, was the steepest since February 2021. The ministry attributed the decline in part to a base effect from last year's consumer coupon program.
Youth employment remained weak. Employment among those aged 15 to 29, the previous definition, fell by 147,000 from a year earlier, and the employment rate for the group dropped 1.1 percentage points to 44.0%. Newly published figures for those aged 15 to 34 showed a decline of 98,000. The ministry began releasing separate statistics this month for the 15-to-34 age group, which was redefined as youth under an amendment to the Special Act on Promotion of Youth Employment. The employment rate for the group fell 0.4 percentage points to 56.1%, while the unemployment rate rose 0.1 percentage point to 4.2%. The weakness persisted even with the inclusion of people in their early 30s, where conditions are relatively better.
Analysts said it remains to be seen whether the manufacturing recovery will hold. The gain was limited to 16,000 jobs, and automobiles and textile manufacturing, both large employers, continued to struggle. Some analysts said a base effect from 26 straight months of manufacturing job losses accounted for much of the rebound. Uncertainty in the Middle East is another variable.
"The rebound in manufacturing employment should be seen as a temporary fluctuation within a long-term downward trend," said Kim Sung-hee, a professor at the Graduate School of Labor Studies at Korea University. "There are still many non-regular workers in insecure positions, and the structural problem continues in which employment among older adults rises while employment among young people falls."
The government plans to move quickly to finalize detailed plans for its National Jobs Project, which covers job creation in both the private and public sectors. For sectors with weak employment, including construction and agriculture, forestry and fisheries, dedicated task forces will identify measures to revive industry activity and train workers. Preparations will be stepped up for a youth employment recovery plan announced in August, which is set to take full effect next year. The government said it would "mobilize capacity across ministries and respond with all available means so that the fruits of growth spread through jobs."