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The nation's jobless rate continued to decline in May, with the seasonally adjusted unemployment rate dropping for an unprecedented 16 months straight and dipping below 4 percent for the first time in 29 months, the National Statistical Office (NSO) said yesterday.

Consequently, May's seasonally adjusted unemployment rate - which eliminates variations stemming from seasonal industries such as the construction and agricultural sectors - stood at 3.9 percent, down 0.1 percentage point from the previous month. NSO officials said that the rate is at its lowest point and is the first time to fall below 4 percent since the nation submerged into a financial crisis.

"Although Korea has fallen to lower unemployment levels in the past, this is the first time in history that the seasonally adjusted unemployment rate has fallen for 16 consecutive months and is the first time to fall below 4 percent since December 1997, when it stood at 3.0 percent," said an NSO official.

The prior record was three consecutive months of decreases, set between June and September 1993, according to NSO figures. Conver-sely, a seven-month upward streak in unemployment rate was set between December 1997 and July 1998, the official pointed out.

The drop in jobless figures was attributed to the country's continued economic recovery.

"Increased employment activity stemming from a growing economy helped bring unemployment down further last month," said another NSO official. "At the current pace, unemployment will be able to sustain 3 percent levels."

Last month's unadjusted unemployment rate fell 0.4 percentage points from April, standing at 3.7 percent, also marking bottom levels since December 1997, when it stood at 3.1.

Meanwhile, the number of unemployed workers fell to 828,000 in May, down 72,000 from the previous month and halves jobless figures recorded in February last year, when some 1.78 million people were out of work.

However, the drop in unemployment, fueled by strong GDP growth, is not all good news.

"Although downward movement in unemployment is generally considered as positive, excessive drops or prolonged trends also serve the function of fueling inflationary pressures," said Oh Suktae, an economist at Citibank. "It is likely, given the current trend that unemployment will soon play a factor pressuring a hike in consumer prices and perhaps interest rates toward the end of the year."

Oh added that he sees unemployment dropping below the "threshold point" of 3.5 percent, set internally by the Bank of Korea (BOK) to spark counter-inflation measures, toward the end of the year.

Be that as it may, employment figures rose slightly to 21.35 million workers in May, up from 21.07 million the previous month. The nation's economically active population also rose to 22.18 million, up from the 21.97 million in April.

By industry, most sectors experienced an increase in employment figures during May, led by the agricultural and construction sectors with increases of 5.35 percent and 2.89 percent, respectively. Only the manufacturing sector suffered a modest decline in employment with a decrease of 0.5 percent from the previous month.

Based on age, all categories enjoyed declines in jobless figures, except for a slight drop within the "30 - 39 years" category.

When measured by standards set by the Organization for Economic Cooperation and Development (OECD), the jobless rate stood at 4.0 percent and number of unemployed at 896,000 in May, down from the 4.4 percent and 969,000 set in April.

The nation reached a peak in its unemployment rate in Feb. 1999, when it hit a 17-year high of 8.6 percent. The nation experience massive corporate and financial restructuring efforts which led to widespread layoffs beginning in early 1998.

For the year, the government is targeting the country's annual average jobless rate to fall between 4 percent and 5 percent this year, from 6.3 percent level in 1999. After hitting a 17-year high of 8.6 percent in February 1999, the nation's jobless rate has been on a steady decline.
(Korea Herald )