[BizHanKook] Driven by a semiconductor export boom fueled by the artificial intelligence (AI) frenzy, South Korea’s total exports are projected to enter the dream era of $1 trillion for the first time in history this year. At the current pace, the $1 trillion annual export milestone is expected to be reached within this month. While this semiconductor-led prosperity has brought a mid-3% economic growth rate and a per capita national income of $40,000 within reach, the reality felt by ordinary citizens is that the economy is at rock bottom.
One of the reasons for the wide gap between perceived economic conditions and macroeconomic indicators is the sluggish recovery of the labor market. With the number of employed people in the manufacturing sector—considered a source of high-quality jobs—declining, the increase in the number of employed people this year is highly likely to remain at its lowest level since 2020, when employment collapsed due to the COVID-19 pandemic. This is because to achieve the annual employment targets projected by the government and the Bank of Korea, the number of employed people must increase by more than 200,000 per month year-on-year during the fourth quarter (October–December).
President Lee Jae-myung emphasized expansionary fiscal policy to resolve inequality and polarization during his '2027 Budget Policy Speech' at the National Assembly on the 2nd. President Lee advocated for "growth for all," stating, "It is time to answer the desperate appeal of the people who say the national economy has improved but their own livelihoods remain difficult, and the heavy question of what growth is for if one's own life does not improve."
In particular, he announced that the number of people eligible for job experience, training, and employment support would be expanded from 560,000 to 720,000 through the introduction of internship semesters. He also explained that the number of jobs for the elderly would be increased by approximately 30,000, reaching 1.18 million. President Lee’s emphasis on "growth for all" through job expansion comes as the decoupling between the economy—where growth forecasts are steadily rising—and the labor market—which is showing weaker-than-expected trends—deepens.
In fact, Lee Hyung-il, First Vice Minister of Finance and Economy, told reporters on October 16 while attending the IMF-World Bank Annual Meetings in Bangkok, Thailand, "Unless a new external event occurs in the remaining period that has a significant impact, I think a mid-3% growth rate this year is possible," and further clarified that the "mid-3%" range refers to "3.4%, 3.5%, and 3.6%."
This marks the first time he officially mentioned the possibility of an additional upward adjustment just three months after raising the growth forecast from 2.0% to 3.0% last July. In its 'October 2026 Economic Situation Assessment' released on October 22, the Bank of Korea also stated that this year's growth rate would significantly exceed its August forecast of 3.3%. This comes just two months after it raised the forecast from 2.6% to 3.3%.
While the South Korean economy is showing strength to the point where the government and the Bank of Korea are discussing further upward revisions to growth forecasts, the pace of recovery in the labor market is falling short of expectations. In its 2026 Economic Outlook announced in August, the Ministry of Finance and Economy projected that the number of employed people would increase by 150,000 compared to last year and that the employment rate would reach 63.0%.
However, according to the Korean Statistical Information Service (KOSIS), the monthly average number of employed people from January to September of this year was 28.887 million, an increase of only about 117,000 compared to the same period last year (28.77 million). As the number of employed people has grown less than the government's forecast, the employment rate is stuck at 62.8%. This is also lower than the Bank of Korea’s projected annual increase of 140,000 employed people or its employment rate forecast of 62.9%.
The backdrop for the number of employed people falling short of government or central bank expectations lies in the poor employment performance of the manufacturing and construction sectors. The monthly average number of employed people in the manufacturing sector, which provides high-quality jobs, decreased by 51,000 year-on-year from 4.392 million to 4.341 million between January and September. Meanwhile, employment in the construction sector, which has a high proportion of temporary and daily workers, decreased by 37,000 from 1.938 million to 1.901 million during the same period due to the economic downturn. While the fruits of the semiconductor boom are concentrated on some workers, ordinary citizens and vulnerable groups are facing a shrinking job market.
The problem is that, unlike the growth rate which is rising above government or central bank forecasts, labor indicators are finding it difficult to even approach their initial targets. To achieve the government's goal of a 150,000-person increase in employment this year, the number of employed people must grow by an average of about 250,000 per month year-on-year during the three months of the fourth quarter. This means the increase must be more than 130,000 higher than the monthly average increase recorded between January and September. Even to approach the lower Bank of Korea forecast, the monthly average number of employed people in the fourth quarter would need to increase by about 210,000 compared to the same period last year.