(Reuters) - Job growth in South Korea will remain weak for the rest of this year as a boost in fiscal spending won’t be enough to quickly offset employment losses in service industries and the private sector, the finance minister said.
“Weak employment growth is bottoming out,” finance minister Kim Dong-yeon said in an interview with foreign media in Seoul.
Asia’s fourth-largest economy created 5,000 jobs in July from a year earlier and 3,000 in August, he noted.
“This kind of trend will continue in the second half.”
Kim made the remarks on Thursday but they were embargoed for release on Friday.
Although the government has been boosting fiscal spending on jobs, including a 3.8 trillion won ($3.5 billion) supplementary budget, state support alone can’t create new positions immediately, according to Kim.
“The service sector used to lead job growth, and it’s where we lost jobs in August,” Kim said.
South Korea’s unemployment rate hit an eight-year high in August as companies shed jobs in response to a mandatory hike in minimum wages, adding to economic policy frustrations and political challenges for President Moon Jae-in whose approval rating is now close to the lowest since his inauguration.
Also in August, consumer sentiment plunged to the lowest since March 2017, highlighting the fragile state of the economy.
A slew of mixed data has offered scant evidence of economic strength, and investors have questioned the government’s growth strategies.
Nonethless, Kim said the government is sticking to its current growth forecast of 2.9 percent, noting the economy will continue to benefit from solid export growth, although global trade tensions remain a concern.
Reporting by Shin-hyung Lee; Writing by Cynthia Kim; Editing by Kim Coghill