Korea in Biggest Construction Slump Since Asian Crisis
05 December, 2018
Korea is suffering the biggest building slump since the 1997 Asian financial crisis.
According to the Bank of Korea on Tuesday, construction investment fell 6.7 percent on-year in the third quarter to W57.9 trillion (US$1=W1,108). That was the biggest decline since the first quarter of 1998 (down 9.7 percent) and the first quarter of 2008 (down 5.1 percent) at the height of the global financial crisis.
The decline is happening in both the private and public sectors. Investment in apartments and commercial property dropped 6.7 percent, while investment in railways, roads and other civil engineering projects fell 6.6 percent.
The government allocated W19 trillion for infrastructure projects this year, down W3 trillion from last year, and next year's budget is another W500 billion lower.
Many jobs were lost. According to the Construction & Economy Research Institute of Korea, construction jobs dwindled by 80,155 compared to the same period of 2017 in the third quarter. Lee Hong-il at the institute said, "We will see the full impact on building jobs around the first half of next year."
Builder Samsung C&T recently started taking applications for voluntary retirement. Staff who worked more than four years in the company are eligible for compensation if they choose to quit.
Yet Samsung C&T achieved a cumulative operating profit of W861 billion in the first three quarters of this year and is expected to surpass W1 trillion for the first time since the company's establishment. But the number of employees has fallen from 7,952 in 2015 to 5,696 as of the first half of this year.