The political turmoil following President Yoon Suk Yeol's ill-fated martial law declaration could negatively impact the labor market, according to a report by a state-run think tank.

The Korea Labor Institute said that employment for 2025 is expected to increase by less than 100,000 compared to this year, in its report submitted to Rep. Kim Hyun-jung of the main opposition Democratic Party of Korea. This is significantly less than the institute's previous estimate of 120,000, which it projected prior to Yoon declaring martial law on Dec. 3.

Another state-run agency, the Korea Development Institute, projected employment to increase next year by 182,000.

"If the (market's) faith in the consistency of government policy falters, the effects on the labor market could be shocking, comparable not even to the situation during the 2016 impeachment (of Park Geun-hye)," the report said, adding that the recent political situation could end up hurting both the management of major firms and the operations of smaller enterprises.

The KLI likened the current situation to 1980, which was the last time martial law was declared in South Korea prior to Dec. 3. Martial law was declared in Busan in October of 1979 amid the pro-democracy protests against dictator Park Chung-hee, and was expanded to the entire country the next year after Gen. Chun Doo-hwan's military coup and his bloody crackdown on protesters.

In 1980, employment increased by 81,000, which was less than half of the 190,000 increase from 1978 to 1979.

"In order to minimize the negative effects of the martial law declaration and the related (political) situation, the political circles should not aggravate the uncertainty across sectors of the economy... They should gather at the National Assembly and find measures to stabilize and stimulate the economy while considering (economic) buffering through expansive fiscal policies," the report said.