Although semiconductor exports continue to enjoy a boom, total employment last month turned to a decline for the first time in 17 months. The number of manufacturing workers fell by 140,000, the largest drop in seven years and three months. Even as chips drive exports, their low employment share and low job-creation effect mean the boom has failed to spread into broader manufacturing job gains.
According to the "May 2026 Employment Trends" released by Statistics Korea on Thursday, the number of workers aged 15 and older last month stood at 29.12 million, down 40,000 from a year earlier. It was the first time in 17 months that the number of workers fell from a year earlier, since December 2024 (-52,000). The employment rate for those aged 15 and older was 63.3%, down 0.5 percentage point from a year earlier. The decline was the largest in five years and three months, since February 2021. The employment rate for those aged 15 to 64, the comparison standard used by the Organization for Economic Cooperation and Development (OECD), was 70.2%, down 0.3 percentage point from a year earlier.
The employment slump was led by manufacturing. The number of manufacturing workers fell by 140,000 from a year earlier. That was the largest decline in seven years and three months, since February 2019 (-151,000). Beyond manufacturing, the number of workers in agriculture, forestry and fishing fell by 121,000, and professional, scientific and technical services declined by 89,000. The number of construction workers also fell by 43,000.
By contrast, the number of workers in health and social welfare services rose by 212,000. Arts, sports and leisure-related services increased by 44,000, and transportation and warehousing rose by 36,000. Employment growth in health and welfare services, driven by expanding care demand, continued, but it was not enough to offset declines in manufacturing, agriculture, forestry and fishing, and professional, scientific and technical services.
The decline in manufacturing employment was attributed to weakness in some sectors, including automobiles, rubber and plastics, and food products. "While the number of workers increased in sectors such as clothing, accessories and electronic component manufacturing, there were declines in sectors such as automobiles and rubber and plastics," Bin Hyun-jun, director general of the Social Statistics Bureau at Statistics Korea, said in a briefing that day. "Food products shifted from an increase to a decline, and the decline in automobiles widened."
Analysts also said the effect of semiconductors, which have driven the recent export recovery, in improving manufacturing employment is limited. "The recent increase in exports appears to be led mainly by semiconductors, but the share of semiconductors in the workforce is not large," Bin said. He added, "Based on the regional employment survey, the share of semiconductors within manufacturing is around 3 to 4%," and "semiconductors are judged to be a sector with a relatively low job-creation effect compared with other manufacturing industries, so their effect on employment is low relative to the increase in production."
High oil prices and disruptions in raw material supply stemming from the prolonged Middle East war were also interpreted as a burden on some sectors. "As the Middle East war has dragged on, high oil prices and raw material supply disruptions in some sectors appear to have had an effect," Bin said. "There may have been an impact on automobiles and food products as well." However, he added, "It is difficult to link the decline in workers in specific sectors one-to-one with the effect of the Middle East war."
The youth employment slump also deepened. The number of workers aged 15 to 29 fell by 255,000 from a year earlier. That was the largest decline since January 2021 (-314,000). The youth employment rate was 43.8%, down 2.4 percentage points from a year earlier. This was also the largest drop since January 2021 (-2.9 percentage points). The number of workers in their 20s fell by 251,000, the largest decline in five years and four months.
"The youth is an age group whose population is declining overall, but this time the decline in workers was greater than the population decline," Bin said. "The number of young workers fell in sectors such as information and communications and professional, scientific and technical services." He added, "The trend of delayed youth employment, as hiring culture shifts from regular open recruitment toward occasional hiring and experienced workers, also appears to have had an effect."
Unemployment indicators also worsened. The number of unemployed last month was 878,000, up 25,000 from a year earlier. The unemployment rate was 2.9%, up 0.1 percentage point from a year earlier. The youth unemployment rate was 7.2%, up 0.6 percentage point from a year earlier. The labor force participation rate was 65.2%, down 0.4 percentage point from a year earlier.
The economically inactive population was 15.986 million, up 264,000 from a year earlier. Among the economically inactive, the number of people who were "resting" was 2.437 million, up 47,000. The number of discouraged job seekers was 337,000, down 9,000 from a year earlier.
