All Indices Declining
The Federation of Korean Industries (FKI) said on March 6 that the current slowdown of the Korean economy is not temporary but structural and persistent.
According to the FKI, Korea’s rate of labor productivity increase, which used to be as high as 20.4% in the first quarter of 2010, dropped to 1.2% in the fourth quarter of 2012 and remained below 0% for 11 quarters in a row until the third quarter of last year. It added that employees’ wages continued to increase during the same period to pose an increasing burden on enterprises.
Likewise, the average operating ratio of the manufacturing sector decreased for four consecutive years from 80.5% to 74.2% between 2011 and 2015. For reference, the percentage had been 67.6% during the East Asian financial crisis of 1998 and 74.4% during the global financial crisis of 2009.
Listed companies’ sales showed a sharp decline due to sluggish domestic consumption and exports and those of the 30 largest enterprises plummeted at a more rapid pace. Specifically, listed companies recorded a sales growth of 19% in 2010 but the sales dropped from 2011 and decreased in 2014.
The exports, which are on the decrease for the 14th consecutive month, began to lose steam in 2010, too. The negative growth is expected to continue for the time being due to external uncertainties. The export unit value exceeded the reference value of 100 of 2010 by a margin of 8.4 in August 2011 but plunged to 77.8 in January this year, falling below 80 for the first time since records began in 1988.
Private consumption, which accounts for half of the GDP, remains sluggish as well. It showed a growth rate of 5.1% in 2007 but the growth has remained at around 2% since 2012. Besides, a decrease in population is compounding the problem. The number of working-age population, aged between 15 and 65, is predicted to decline from this year and that of those aged between 25 and 49 is already on the decrease.