Salary 'Cold Bath', Bonus 'Gone~', Loans 'Frozen'... Office Workers Feel the Chill Too

Repeated unpaid leaves tighten living expenses
Many companies withhold or reduce performance bonuses compared to last year

Decreased income leads to increased debt and a vicious cycle
Experts say "Disaster relief excludes workers, raising risks of reduced consumption and domestic economic downturn"

Overnight temperatures dropped sharply, bringing a year-end cold snap on the 30th. Office workers are seen wearing thick coats as they head to work at the Sejongno intersection in Jongno-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Donghoon Jung] Bae Seong-su (33, pseudonym), who works at a small home appliance company, was put on unpaid leave for two weeks in mid-month as his company temporarily closed. Due to the slump in domestic demand caused by the novel coronavirus disease (COVID-19), the production factory ultimately stopped operating. Although he did not expect a year-end bonus, the sudden notice of unpaid leave has left Bae's household finances tight, even for living expenses. Losing about 900,000 won per week in salary, Bae recently started doing delivery part-time jobs through Coupang Flex every early morning. Bae said, "I have to repay my jeonse loan and cover childcare costs for my three-year-old son, so this news came like a bolt from the blue," adding, "I have to endure by doing part-time work."

Due to COVID-19, office workers are facing a harsh year-end and New Year period. Not only industries severely affected by COVID-19 such as travel and aviation but also companies facing a downturn in domestic demand are increasingly resorting to temporary closures and austerity management. Most companies have reduced or eliminated year-end bonuses, and some have cut labor costs by announcing unpaid leave. Additionally, with the government's household loan management policy restricting borrowing, there are talks that office workers are going through a 'COVID barley hump' (a difficult period).

According to a survey conducted by the application Remember from the 17th to the 21st among 441 HR managers of companies, a significant number of companies plan not to pay or to reduce the amount of year-end bonuses due to COVID-19 damage. Only 52.4% of companies responded that they would pay year-end bonuses this year, down about 10 percentage points from 62.1% last year. Among companies that paid bonuses both last year and this year, 45% said they reduced the bonus amount this year. About 30% said the amount was the same as last year, and only about 25% said the bonus amount would be larger this year.

Baek (36), an office worker who did not receive any year-end bonus or bonus, said, "(My company) did not pay the year-end bonus that was given every year, citing COVID-19, even though performance did not decline," adding, "If austerity management continues using 'COVID excuses,' the livelihoods of office workers and self-employed people will become even more difficult."

Income reduction and worsening household finances are creating another vicious cycle. According to the Financial Supervisory Service, household loans from banks in November this year increased by 3 trillion won from the previous month to 13.6 trillion won. Compared to 7 trillion won during the same period last year, this is an increase of 6.6 trillion won. While the rise in 'all-in' investments due to the stock market boom is a factor, many have also turned to bank loans for living expenses.

Professor Lee Jeong-hee of the Department of Economics at Chung-Ang University said, "The government is trying to provide the third round of disaster relief funds, but the focus is on supporting self-employed people whose businesses have been suspended, leaving workers on unpaid leave or with reduced income neglected," adding, "Real income reduction is likely to lead to decreased consumption and a worsening domestic economy."

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