SEOUL, April 11 (UPI) — South Korea’s unemployment rate rose to a 17-year-high in March, after the country raised its minimum wage by the highest increase in 17 years in January.
Statistics Korea on Wednesday announced the number of unemployed Koreans hit 1.25 million last month, recording a 4.5 percent unemployment rate, and marking the third straight month that the number of jobless people topped the one million mark.
The situation was considerably worse for young people, aged between 15 and 29, with youth unemployment hitting 11.6 percent, a two-year high for that month.
The number of employed people last month stood at 26.6 million, up 112,000 from a year earlier. It marked the second straight month of growth confined to the 100,000 range.
Experts say the sluggish growth in jobs is likely due to the steep minimum wage hike introduced in the wake of the New Year, as employers feel the pinch of extra labor costs for part-time workers, Chosun Ilbo reported.
The wage floor increased to roughly seven dollars an hour, a 16.4 percent rise, or the biggest annual increase seen in 17 years.
Wholesale and retail businesses, as well as the food and accommodation sectors, have seen a substantial decrease in jobs, most of which pay by the hour.
“We can see there is a reduction of jobs for unskilled and simple work, as well as the service sector, which was feared would happen after the 16.4 percent minimum wage hike,” said Yoo Gyeong-joon, Professor of Korea Institute of Science and Technology and former head of Statistics Korea.
“There’s a large possibility that many self-employed businesses will have to close down as they cannot shoulder the burden of labor costs, and as a result, the unemployment crisis will become even more difficult to resolve,” Yoo said.
The number of self-employed people decreased by 40,000 in March, compared to the year before.
Meanwhile, Statistics Korea says the waning growth of jobs is due to difficulties in the construction sector, and an overall decline in the population.
It added that the numbers appeared to have reduced to do a base effect, as job growth figures last year exceeded 460,000.