Jobless rate increases to 4.2 percent in South Korea

Bloomberg News Service

SEOUL — South Korea's jobless rate rose in February to the highest level in a year as slowing economic growth and a government drive to clean up indebted companies forced manufacturers and other employers to cut workers.

Unemployment rose to 4.2 percent from January's 4.1 percent, seasonally adjusted, the National Statistical Office said. That was the highest since February 2000. Without accounting for seasonal factors, the jobless rate jumped to 5 percent. The number of jobless people rose 8.9 percent to 1.07 million, a 12-month high.

"With the slowdown in Korea's economy, workers are having a hard time finding jobs," said Kim Sung-sik, an economist at LG Economy Research Institute. "We may not start to see the unemployment rate fall until the fourth quarter."

A stalling economy has prompted some Korean companies to put hiring on hold, and the government's crackdown on companies with almost $50 billion in bad debt is pushing up the jobless count.

Manufacturing jobs fell by 60,000 jobs, or 1.4 percent, last month from January, the statistics office said. Retailers, restaurants and hotels hired 74,000 fewer workers, cutting employment by 1.3 percent.

To soften the impact of layoffs, the government spent more than one-third of its 2001 budget in the first two months of the year on creating jobs and providing training and assistance for people out of work.

The number of unemployed people will probably fall in March to between 980,000 to 990,000 as government job-creating measures start to produce results, Labor Minister Kim Ho-jin said.