Private sector employment is expected to increase by 60,000 this year... Consumption recovery drives improvement in economic vitality

Thanks to the domestic consumption recovery momentum this year, private sector employment growth is expected to expand compared to last year. The Bank of Korea pointed out that, compared to overall employment indicators, private employment more accurately reflects the actual economic trend, and based on this analysis, it is concluded that the possibility of improvement is significant.

In the report titled “Estimating Recent Employment Conditions through Private Employment” released on January 7, the Bank of Korea forecasted that private employment will increase by about 60,000 this year. This figure represents an expansion from last year’s increase of 50,000. Additionally, the “employment gap,” which reflects the structural level of private employment and the difference from actual demand, will narrow from -80,000 to -20,000, indicating that the overall employment situation is gradually improving.

Private employment refers to employment outside the public sector and is regarded as a key indicator reflecting the endogenous momentum of the economy and the domestic demand foundation. In recent years, with a significant increase in government-led public jobs, it has become increasingly difficult to grasp the actual employment environment based solely on total employment figures. To address this, the Bank of Korea conducted a separate analysis of private employment statistics for more precise economic judgment.

The report shows that as of 2024, private employment has been weak due to factors such as a downturn in the construction industry, but since the second half of the same year, employment decline has eased following the consumption recovery. The Bank of Korea believes that, in explaining trends in consumption and prices, private employment has a higher correlation with total employment, and for future economic growth or inflation forecasts, private employment indicators are also more practical.

The Bank of Korea predicts that the proportion of public jobs will gradually increase in the future. The report also includes analysis results indicating that, as of 2024, the public sector has reduced the overall unemployment rate by 0.1-0.2 percentage points. As the impact of the public sector on employment indicators grows, private sector employment indicators are expected to serve as a supplementary tool for macroeconomic assessment.

If this trend continues, the importance of private employment may further increase when policy departments set employment targets or formulate economic stimulus strategies. Especially if the employment foundation centered on domestic demand can be restored, the overall economic vitality is also expected to be somewhat revitalized.