Youth employment has declined for 48 consecutive months: Behind the semiconductor boom, South Korea's young people have been "left out" by the times.

Note that South Korea's unemployment rate fell to its lowest level in more than three years in October, but hiring activity weakened from the previous month and young workers struggled to find jobs, highlighting the uneven recovery of Asia's fourth-largest economy. According to data released by Statistics Korea on Wednesday, the seasonally adjusted unemployment rate fell to 2.5% from 2.6% in September, matching the lowest level since May 2023. Economists mainly attributed the decline to people exiting the labor market rather than a clear improvement in demand. The number of employed people fell by 50,000 from the previous month, while the number of unemployed fell by 29,000. The data highlight that South Korea's semiconductor-driven boom has yet to broader job growth. Surging demand for AI chips has boosted exports and lifted economic growth, tightening the overall labor market, but the benefits have largely bypassed labor-intensive industries and young workers, and domestic demand remains sluggish. "The unexpected decline in South Korea's October unemployment rate overstates the strength of the labor market," said economist Hyosung Kwon. "The unemployment rate fell because people exited the labor market, not because hiring picked up. Still, the bigger picture is that the market looks solidthe unemployment rate is well below the post-pandemic average of 3.1%." On an unadjusted basis, the number of employed people rose by 139,000 from a year earlier, marking the fourth consecutive month of gains exceeding 100,000. The health and social welfare services sector added 249,000 jobs, accounting for most of the overall employment growth. However, the youth employment rate fell 1.7 percentage points to 42.9%, the lowest for October since 2020; the number of employed people aged 15 to 29 fell by 196,000, the 48th consecutive month of decline. Overall, consumer-facing industries were particularly weak. Employment in the accommodation and food services sector fell by 137,000 from a year earlier, the largest decline since February 2021. Manufacturing employment fell by 7,000, reversing last month's gain; construction employment fell by 42,000. "The data highlight the growing divergence between South Korea's export-led recovery and weak domestic demand," said John Bromhead, senior economist at Moody's Analytics. "South Korea's labor market remains weaker than the headline unemployment rate suggests." The divergence poses a challenge for the Bank of Korea, which is weighing whether to raise interest rates again this month. Although persistent inflation and strong export growth provide reasons for further tightening, weak domestic consumption and sluggish hiring in labor-intensive industries suggest the economy remains vulnerable to higher borrowing costs. Bromhead expects the Bank of Korea to raise its benchmark rate again this month, followed by a prolonged period of standing pat.