[The Editors' Verdict] COVID-19 Polarization and the Education Gap

The time to break free from the fear of COVID-19 is approaching. However, even after vaccinating the entire population and ending COVID-19, we cannot return to the old ways. Remote education, remote meetings, telecommuting, and online consumption have become commonplace due to COVID-19. Not only lifestyles and labor but also the industrial landscape are changing, and the ability to respond to these changes varies by company and individual, widening polarization. Interest in infectious diseases and global warming has increased due to COVID-19, accelerating the growth of new industries such as bio and healthcare, eco-friendly energy, IT, and communication. Shinhan Financial Investment and others estimate that the share of new industries surged from 31% during 2013-2016 to 47% during 2017-2020. They analyze that the share of new industries in the stock market is 64%, higher than Europe (26%), the advanced countries' average (44%), and even the United States (54%). This helps explain why the recent rise in Korean stock prices has been higher than in other countries.

However, as traditional industries with large employment shares decline, the economic growth rate fell from 3.2% in 2017 to 2.0% in 2019, and plummeted to nearly -2% in 2020, while income inequality worsened simultaneously. Household income for the bottom 20% (first quintile) decreased by -1.1%, earned income by -10.7%, and business income by -8.1% (Statistics Korea, Q3 2020 data). Meanwhile, household income for the top 20% (fifth quintile) increased by 2.9%, widening the gap with the first quintile to 4.88 times. Although the government significantly increased welfare spending such as disaster relief funds, the fifth quintile, which has larger household sizes, received about three times more than the first quintile, further widening the gap. According to the 2019 stock dividend income data recently released by the National Tax Service, the top 1% accounted for 69% of the total, while the bottom 50% accounted for only 0.2%. Although comprehensive taxation on financial income was strengthened to reduce the gap in financial asset income, the effect was minimal.

Resolving polarization and inequality depends on jobs and education. Income differs between those who can work from home and those who cannot, and between those who can receive remote education and those who cannot. According to a survey by Korea Delta Technologies in June last year, 74% of companies have implemented or are implementing telecommuting, with larger companies having higher rates?84% for large companies with over 1,000 employees. Although direct comparison is difficult, this is higher than the 66% telecommuting rate among U.S. companies (UNESCO survey). According to statistics from the Ministry of Education and the Korea Educational Development Institute, lifelong learners increased by 49% and online learners by 65.7% in 2020. The participation rate in lifelong learning is 45.4% for those earning over 5 million won, but only 29.7% for those earning less than 1.5 million won, and 27.4% for those below the median income 50%. The main purpose of lifelong education is to improve job skills, which is most important for vulnerable groups at 37%.

Labor and education cannot keep up with technological and industrial changes. This is both a strength and a weakness of Korea, but it causes polarization and inequality. This problem is difficult to solve through welfare and taxation alone. We must increase educational opportunities for vulnerable groups and improve the quality of education for future generations to develop their ability to work. Although university students complain about the low quality of remote education, the situation is even more serious for elementary and secondary students. However, the educational gap caused by COVID-19 has been neglected. We must ensure that they become a hopeful generation leading new industries, not a COVID generation filled with despair. Instead of recklessly spending disaster relief funds in populism, investments should be redirected toward forming human capital for vulnerable groups and future generations. The quality of remote education must be improved, made easily accessible, and supplemented with offline education. This is the first task in solving the more serious problem of polarization than COVID-19.

Kim Taeg-gi, Professor of Economics, Dankook University

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