[비즈한국] Recently, the government, along with state-run research institutes and the Bank of Korea, has been sequentially upwardly adjusting this year's economic growth rate to the 3% range. Some foreign investment banks (IBs) are even projecting growth rates as high as the 4% range. This rise in growth forecasts is driven by the AI boom, which has propelled semiconductor companies into a golden era. Anticipating a significant increase in tax revenue from the semiconductor boom, the government has set next year's budget at 820.9 trillion won, a staggering 12.8% increase from this year, and plans to establish a 162.3 trillion won "Future Response Fund" next year.
While the semiconductor boom is lifting growth projections and expanding government spending, the warmth of this economic prosperity has yet to reach the labor market. In the first half of this year, the number of workers who involuntarily left their jobs due to workplace closures, business shutdowns, early retirement, layoffs, or sluggish business performance exceeded 400,000, marking the highest figure since 2021, when the labor market was reeling from the impact of COVID-19.
The Bank of Korea revised its economic outlook on the 27th of last month, raising this year’s growth forecast from 2.6% to 3.3%. The forecast for next year was also raised from 2.1% to 2.9%. Previously, the Ministry of Economy and Finance had raised its growth forecast for this year from 2.0% to 3.0%, and the Korea Development Institute (KDI) increased its projection from 2.5% to 3.2%.
The market is increasingly voicing the possibility that the Korean economy could grow even faster this year than the government or the Bank of Korea anticipates. According to Bloomberg and other sources, as of the 28th of last month, Capital Economics (UK) and ING Financial Markets each projected a 4.0% growth rate for South Korea this year. JP Morgan and NAB/BNZ predicted 3.8% each, while Citi, Bloomberg Economics, Korean Re, and Moody's each estimated 3.7%. iM Securities forecasted 3.6%, and ANZ, Credit Agricole, DBS, DekaBank, and Deutsche Bank projected 3.5% each.
Despite growing expectations for the Korean economy, this optimism is not translating into the labor market at all. Employment conditions are worsening, with "involuntary unemployment"—people leaving their jobs against their will—reaching its highest level since the pandemic. An analysis of Statistics Korea's microdata on employment trends shows that there were 405,778 involuntary retirees in the first half of this year. This is an increase of 27,318 (6.7%) compared to the same period last year. Furthermore, they accounted for 43.1% of all retirees (942,052) in the first half of the year. More than 4 out of every 10 people who retired this year were forced out of their jobs against their will.
Involuntary unemployment refers to cases where an individual leaves a job due to "workplace suspension or closure," "voluntary/early retirement or layoffs," "completion of temporary or seasonal work," or "lack of work or business stagnation." Reasons such as childcare, housework, mandatory retirement, or dissatisfaction with working hours or pay are not included in this category.
Involuntary unemployment peaked at 600,289 in the first half of 2021, during the lingering aftermath of COVID-19, before dropping sharply to 379,744 in the first half of 2022. It fell further to 340,369 in the first half of 2023, but subsequently rose back to the 370,000 range in the first half of 2024 (370,639) and the first half of 2025 (378,460) as the economy softened due to interest rate hikes and the Russia-Ukraine war.
However, this year, despite the semiconductor boom and expectations for record-breaking economic growth and tax revenue, the number of involuntary unemployed has exceeded 400,000, indicating a worsening of the situation. This is interpreted as being due to the nature of the semiconductor industry, which is capital-intensive, requiring large-scale facilities and automated processes rather than human labor, resulting in a low employment-inducing effect. According to the Hyundai Research Institute, as of 2023, the employment-inducing coefficient for the semiconductor industry is 2.4 people per 1 billion won of production, which is less than one-third of the total industry average (8.2 people).
Beyond involuntary unemployment, the quality of employment has also deteriorated, with the number of "ultra-short-term" workers reaching an all-time high. In the first half of this year, the number of employees working 1 to 17 hours per week was 2.613 million, an increase of 55,000 from the same period last year (2.558 million), marking the largest scale since the related statistics began in 1980.