Estimation and Analysis of Full-Time Equivalent Employment
Education Services Sector Shows Largest Decline of 24.9%

Korea Economic Research Institute

[Asia Economy Reporter Dongwoo Lee] A study has revealed that the number of employed persons converted based on full-time jobs of 40 hours per week has decreased more than during the IMF crisis amid the spread of the novel coronavirus infection (COVID-19). This result shows a difference of more than ten times compared to the year-on-year decrease rate of employed persons announced by Statistics Korea for the same month.

According to the research results of "Estimation and Analysis of Full-Time Equivalent (FTE) Employed Persons," commissioned by the Korea Economic Research Institute to Professor Kisung Park's team at Sungshin Women's University, the full-time employment growth rate as of March fell by 7.6% compared to the same month of the previous year.

This figure was obtained by reprocessing the microdata of the Economically Active Population Survey, the raw data of employment trend statistics, to calculate the scale of employed persons using the FTE method. Employment statistics based on the FTE method are considered indicators that reflect the actual working hours of employed persons, providing a more realistic understanding of the employment situation in society.

According to the annual number of employed persons announced by Statistics Korea as of March, the lowest point was recorded during the IMF crisis in 1998 at -4.8%, and the decrease rate of employed persons in March this year was only 0.7%. However, based on the FTE standard, it was -7.0% immediately after the IMF crisis in 1998 and -7.6% as of the same month this year. Although the headcount of employed persons did not significantly decrease, the amount of work actually assigned to workers decreased at a rate similar to that during the IMF crisis, the research team analyzed.

The occupations most affected by COVID-19 were face-to-face service jobs. This was explained as due to the "social distancing" campaign and consumers' reluctance to go out and dine out because of fear of COVID-19 infection.

In fact, the year-on-year decrease rates of employed persons in March announced by Statistics Korea were ▲Wholesale and retail trade -4.6%, ▲Accommodation and food service activities -4.9%, and ▲Education services -5.4%, in order of magnitude.

When converted to FTE employed persons, the decrease rates were ▲Wholesale and retail trade -11.2%, ▲Accommodation and food service activities -14.6%, and ▲Education services -24.9%, showing a decrease rate of employed persons up to more than four times steeper than the Statistics Korea figures.

There were also industries where the number of employed persons increased according to Statistics Korea but the number of FTE employed persons decreased.

According to Statistics Korea, the year-on-year increase rates of employed persons in March were ▲Health and social welfare services 3.7%, ▲Arts, sports, and leisure-related services 2.0%, ▲Transportation and storage 5.0%, and ▲Business facilities management, business support, and rental services 1.5%.

However, the FTE employed persons in these industries showed a decrease rate as of the same month: ▲Health and social welfare services -3.9%, ▲Arts, sports, and leisure-related services -16.8%, ▲Transportation and storage -5.4%, and ▲Business facilities management, business support, and rental services -4.3%.

In particular, health and social welfare services were thought to have been less affected due to medical demand and government job policies, and transportation and storage due to increased use of logistics services such as parcel delivery amid reduced outings, but the results were contrary to this understanding.

In the case of transportation and storage, the recent large-scale temporary leave wave in the airline industry is interpreted as being reflected in the FTE statistics. Also, arts, sports, and leisure-related services include entertainment facilities such as karaoke rooms and PC rooms, which were identified as high-risk groups for COVID-19, and this sector saw the second steepest job decline among all industries based on the FTE method.

Professor Park said, "When viewed based on FTE, it can be seen that actual jobs, especially in the service sector, have decreased much more severely than indicated by the existing Statistics Korea employment statistics."

Unlike the Statistics Korea survey, jobs for the elderly also showed a declining trend based on the FTE standard. According to Statistics Korea data, the employment trend in March showed a 7.4% year-on-year increase for those aged 60 and over, but the FTE method showed a 1.0% decrease.

In particular, the gap between the FTE-based employment growth rate and the Statistics Korea headcount-based employment growth rate was the largest at 8.4 percentage points for those in their 60s. The research team interpreted this as the largest discrepancy between the number of employed persons calculated by headcount and the actual working hours among those in their 60s.

However, this is explained as meaning that our society temporarily prevented large-scale unemployment from occurring.

Professor Park said, "Through FTE statistics, the government is expected to gauge the actual impact on Korea's labor market," and added, "As a short-term response, reducing working hours can be considered an alternative management measure to mass layoffs."

This content was produced with the assistance of AI translation services.