"My Salary Might Decrease Too" Impact of COVID-19... Employees Fear Wage Cuts

Wage Cut Predictions Spread Amid COVID-19 Impact
2 in 5 Workers Report "Salary Changes"
Experts Say "Workers Feel Anxiety About Job Security"

The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] "There is no immediate way to make money." "The unpaid leave lasted so long that I had no choice but to resign."

Kim (31), an employee at a fitness center located in Sadang, Geumcheon-gu, Seoul, decided to quit due to the impact of the novel coronavirus infection (COVID-19). As the COVID-19 situation prolonged, customer visits stopped, and the center's situation rapidly worsened.

Kim said, "Due to the impact of COVID-19, customers started not coming to the center, and because of social distancing, our business was closed for several weeks. At first, I thought it wouldn't have a big impact. But as COVID-19 continued, I eventually had to take unpaid leave."

He added, "I didn't know when the unpaid leave would end, so I ended up resigning. Other fitness centers were also not doing well, so I applied for a general office job at a company."

As the COVID-19 impact continues to worsen corporate performance, workers' anxiety is growing. Some companies with deteriorating business conditions are taking measures such as unpaid leave or wage cuts. Even executives at large corporations are voluntarily returning their salaries due to poor performance, causing some employees to worry whether their own wages might be cut. Experts stated that wage cuts for employees below the manager level are realistically difficult.

An office worker A (27), working at a small or medium-sized enterprise, said, "The company's situation has become much more difficult than before due to COVID-19. If there is no choice but to cut wages, I have to comply, but it is regrettable to think that I have to receive less pay for the same work."

He continued, "Even if this situation ends, it is uncertain whether the company's performance will return to previous levels. The company is currently preparing various measures to cope with COVID-19."

As the COVID-19 situation prolongs, there is an increasing expectation that wages will also decrease. According to the consumer sentiment survey released by the Bank of Korea on the 30th of last month, the April Wage Level Expectation Consumer Sentiment Index (CSI) dropped 8 points to 101. This is the lowest figure since statistics began to be compiled in 2013.

Especially in Seoul, the 'Wage Level Expectation Index' recorded 99, down 10 points from the previous month, falling below 100 for the first time.

This index shows how consumers judge whether wages will rise or fall compared to now. A decline in the index means that more people believe their monthly salary will decrease.

The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]

There were also people whose salaries changed due to COVID-19. According to a survey conducted on 576 office workers by the job portal Incruit on the 6th, 41.8% of respondents said they experienced salary changes after COVID-19.

The most common reason was unpaid leave (16.3%), followed by wage cuts and returns (12.5%), recommended resignation (4.0%), re-employment offer after recommended resignation (3.8%), and forced dismissal (1.8%). The average unpaid leave period for those affected was 28 days, and the average wage cut rate for those subject to wage reduction was 24.9%.

Some industries struggling with operations due to COVID-19 are recommending unpaid leave. According to the Korean Confederation of Trade Unions on the 1st of last month, an analysis of consultations received by 16 labor counseling centers nationwide from February 1 to March 31 found 153 cases of worker damage due to COVID-19.

By type, consultations related to effectively forced unpaid leave (19.5%) were the most frequent, followed by inquiries about suspension pay (16.5%), and consultations about dismissal and recommended resignation (14.2%).

Office worker B (26) said, "Since this is a time when everyone must work together, I think wage cuts are unavoidable," but added, "What worries me the most is that even after the economy stabilizes, the wages that were cut might not be raised again."

Experts emphasized that wage cuts for employees below the manager level are realistically difficult. Professor Kim Sewan of Ewha Womans University’s Department of Economics said, "With unpaid or paid leave continuing, workers are feeling insecure about job stability," adding, "A sense of crisis is spreading from the airline industry to other sectors."

He continued, "Among some large corporation executives, wage cuts or voluntary returns are ongoing. However, wage cuts for employees below the manager level are unlikely due to the presence of labor unions and others."

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