Despite positive growth in economic indicators, the actual job market remains stagnant, leading to a deepening imbalance. In particular, stagnant incomes and a high inflation rate, especially the surge in food prices, are weakening household purchasing power. This, coupled with the lack of quality job creation, is exacerbating the financial difficulties of ordinary citizens. The first half of 2025 presents a complex economic landscape, where the positive changes in macroeconomic indicators have had a minimal impact on the micro-economy – that is, on the lives of households and individuals.
Robust Growth in Macroeconomic Indicators: Strong Production and Sales
In April 2025, the Estimated Corporate Sales (ECN) recorded a growth rate of 3.7% compared to the same period last year, with a cumulative growth rate of 6.4% for the first quarter of 2025. This growth is primarily attributed to solid sales performance in services, manufacturing, and commercial activities.
In the services sector, positive sales increases were observed in household services, transportation, real estate services, telecommunications and information services, business services, and hotels and restaurants. This suggests that as the post-pandemic recovery continues, consumer activity is robust, and demand for related services has increased. It is particularly analyzed that the increase in travel and leisure activities is invigorating the overall service industry.
In the manufacturing sector, sales growth was prominent across various items including dairy products, milling and bakery products, sugar, beverages and tobacco, textiles and apparel, leather and footwear, paper and paper products, machinery and equipment, and basic metals and metal products. This indicates that robust manufacturing production activities are taking place, driven by both domestic demand recovery and enhanced competitiveness of some export items. However, sales of chemical products, petroleum, and wood products were sluggish, indicating that there are item-specific disparities within the manufacturing sector.
In commercial activities, positive results were seen in fuel, hypermarkets and apparel, household goods, food products, chemicals-pharmaceuticals, retail technology products, and wholesale sales of fertilizers and pesticides. This signifies that consumer sentiment has recovered, and demand for essential consumer goods and agricultural products remains steady. However, sales and maintenance of vehicles, wholesale of agricultural and livestock raw materials, and wholesale of machinery and equipment continued to be sluggish. This reflects a decline in high-value consumption due to high interest rates and economic uncertainty, as well as ongoing difficulties in some segments of the agricultural sector.
Micro-Economic Crisis: Inflation and Income Stagnation
In stark contrast to the positive trend in macroeconomic indicators, the micro-economy is facing a crisis as households' real incomes are decreasing and inflationary pressures are intensifying. In particular, the inflation rate remains high year-on-year, and food inflation has reached a serious level.
Cumulative inflation for the first four months of 2025 reached 3%, surpassing the 2.8% recorded in the same period of 2024. This indicates that overall inflationary pressure is increasing. More critically, food (core) inflation amounted to a staggering 28% during the first four months. As food constitutes the largest proportion of household expenditure, this surge in food prices directly threatens the livelihoods of the majority of households, including low-income groups. It is analyzed that complex factors such as unstable agricultural supply, rising international grain prices, and increased logistics costs are fueling the rise in food prices.
In addition to inflation, a slight decrease in nominal labor income is further exacerbating the weakening of household purchasing power. The combination of high inflation and stagnant incomes is leading to a decline in real purchasing power and increasing the financial hardship for households.
Labor Market Polarization: Public Sector Income Growth vs. Decreased Private Sector Income (Especially Non-Regular Workers and Self-Employed)
Labor market data indicates that the average labor income in the first quarter of 2025 increased by 1.7% year-on-year. This positive figure is largely attributable to wage increases in the public sector (11.9%) and wage increases for private sector employees (2.8%). The wage increase in the public sector, driven by government policy decisions, likely contributed to an improvement in the real income of public sector workers. Furthermore, employees of some large and stable private companies also appear to have experienced a slight increase in income.
However, the incomes of independent workers (self-employed) and domestic workers, who together account for 47% of the total employed population, decreased by 4.8% and 1.2% respectively. This clearly shows that the positive growth seen in macroeconomic indicators is not evenly distributed across the entire labor market. Self-employed individuals are facing difficulties due to economic uncertainty, weakened consumption, and high raw material prices, while domestic workers are also experiencing income declines due to vulnerable employment conditions and low wage levels. As this labor market polarization deepens, criticism is mounting that the benefits of economic growth are concentrated only among certain segments of society.
Disparity Between Macro and Micro Economy: Growth Without Quality of Life Improvement
The most significant characteristic of the current economic situation is the disparity between the macro and micro economies. While economic output is increasing, labor income, especially in the private sector (employees, independent workers, domestic workers), which accounts for 90% of the total employed population, is not keeping pace with the increase in output. In fact, the incomes of independent workers and domestic workers have decreased. This, combined with persistent food inflation, is further deteriorating the real purchasing power and quality of life for the majority of households.
This implies that economic growth is not leading to the creation of quality jobs and is not contributing to the improvement of household living standards. In other words, a virtuous cycle where productivity gains and increased corporate profits lead to increased household income is not functioning. Factors such as labor market flexibility, an increase in non-regular workers, and changes in employment structures due to digital transformation are cited as reasons for this widening gap.
Conclusion and Future Tasks: Policy Efforts for Inclusive Growth
In conclusion, the current economic growth is not contributing to the labor market and is failing to create quality jobs. Furthermore, it is also failing to ensure food supply to alleviate household price pressures. Faced with this situation, a policy approach that simultaneously considers both macroeconomic issues (minimal impact on GDP and employment) and inflation (overall inflation remains single-digit, but food prices, which are essential consumer goods for workers, remain high, deteriorating the quality of life for the majority of the population) is urgently needed.
Future policy directions should focus on the following:
Strengthening Quality Job Creation Policies: Investment should be expanded to create quality jobs that ensure stable and adequate wages. In particular, securing future growth engines and enhancing job creation capabilities requires support for small and medium-sized enterprises, fostering new industries, and strengthening vocational education and training.
Devising Food Price Stabilization Measures: Food inflation directly impacts the lives of ordinary citizens, so multi-faceted efforts are needed to stabilize food prices, including stabilizing supply chains, adjusting agricultural supply and demand, and improving distribution structures. If necessary, short-term measures such as releasing government stockpiles and diversifying import sources should be combined with long-term measures to improve agricultural productivity and respond to climate change.
Alleviating Income Inequality and Strengthening Social Safety Nets: Income reductions among vulnerable groups such as independent workers and domestic workers can exacerbate social inequality. Therefore, income support and strengthening social safety nets for these groups are crucial to ensure a minimum standard of living and promote economic stability.
Establishing an Inclusive Growth Model: An inclusive growth model should be established to ensure that the fruits of economic growth are fairly distributed among all economic actors, not just concentrated among specific groups. This requires both labor market flexibility and a system that respects the value of labor and provides fair compensation.
For economic growth to translate into an improved quality of life for the people, policy efforts are essential to not only achieve quantitative growth in macroeconomic indicators but also to bring about qualitative improvement in the micro-economy. Now is the time for a forward-looking policy shift to resolve the current imbalances and achieve sustainable development.
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