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SEOUL: South Korea's jobless rate jumped in January to its highest in almost nine years despite a faster than expected economic recovery, official figures showed Wednesday.
The five per cent rate last month compared with 3.5 per cent in December and was the highest level since 5.1 per cent in March 2001, Statistics Korea said.
Seasonally adjusted, the rate was 4.8 per cent compared to the previous month's 3.6 per cent and matching the level of February 2000.
The number of employed people stood at 22.87 million last month, up 5,000 from a year earlier.
As the economy picks up, many of those who previously abandoned hopes of finding a job are trying to return to the labour market and swelling the official unemployment statistics, the agency said.
The government, fearful of a jobless recovery, is making job creation its top priority and it has announced plans to create more than 250,000 new positions this year.
The finance ministry forecasts five per cent growth this year but says it will keep its expansionary macroeconomic policy in place for the time being.
The central bank holds a rate-setting meeting Thursday. It is expected to face political pressure to keep the key interest rate at a record low of two per cent, where it has been for 11 straight months.
Chances of a rate hike have been reduced to zero following the jobless figure, said Alaistair Chan, associate economist with Moody's Economy.com
"Despite the improvements in the economy, as seen in monthly exports and production data, firms are reluctant to hire," he said in an emailed commentary.
"Construction in particular shed a number of jobs in January, possibly as a result of the government's crackdown on lending in the property sector."
Gains in manufacturing could not absorb the excess supply of workers, Chan said.
- AFP/yb
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