The number of employed people grew by only 212,000 in August to reach 26.74 million, the smallest on-year increase in six months, according to Statistics Korea on Wednesday.
Youth unemployment meanwhile rose to 9.4 percent, the highest level for the month of August since 1999, when Korea was reeling from the impact of the Asian financial crisis.
The administration of President Moon Jae-in has made job creation a top priority, but so far to no effect. On-year, jobs increased by about 400,000 a month until April and then dropped to 375,000 in May, when Moon took office. It has been falling since.
Seong Jae-min at the Korea Labor Institute said, "Considering the population and economic growth trend, we should see employment growth at more than 300,000. Anything less than that means trouble in the labor market."
Statistics Korea cited a slowdown in the construction industry due to bad weather as a main culprit. Jobs in the construction increased by 34,000 in August on-year, but that was only 20 to 30 percent of the increase from February to July (100,000 to 160,000).
A Statistics Korea official said, "There were 15.2 rainy days in August, almost double the number a year ago," which meant more days with no work at construction sites. The hospitality sector is still in a slump, and jobs in restaurants and accommodation dwindled 38,000 in June, 18,000 in July and 40,000 in August.
There are fears that a minimum wage hike next year will depress the job market even further as small enterprises struggle to pay staff.