The Bank of Korea: "Job Losses Among Office and Sales Workers Due to COVID-19... Wage Polarization Occurs"

"Reduction in Mid-Skilled Jobs Leads to Wage Polarization"
Need to Strengthen Social Safety Nets for Vulnerable Groups

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Since COVID-19, mid-skilled jobs such as office and sales workers have decreased across industries, while wage growth has slowed the most in these sectors, leading to a deepening polarization. There are calls to strengthen employment training considering these changes in the labor market going forward.

According to the Bank of Korea's BOK Issue Note released on the 27th titled "Employment Reallocation and Macroeconomic Impact after COVID-19," the job polarization trend that has continued since the mid-1990s persisted during the COVID-19 period, with mid-skilled repetitive jobs declining and high-skilled cognitive and low-skilled physical jobs increasing.

Mid-skilled jobs such as office workers, salespersons, and assemblers saw a significant decrease. According to the Economically Active Population Survey, the number of mid-skilled employed workers decreased by 1.7% in the third quarter of this year, while high-skilled and low-skilled employed workers increased by 0.5% and 3.9%, respectively.

The Bank of Korea explained that this was due to the difficulty of telecommuting and companies adjusting employment mainly in mid-skilled jobs, which are relatively easy to automate and offer cost-saving benefits. In particular, with the increase in non-face-to-face consumers due to COVID-19, low-skilled jobs such as delivery and courier workers saw a significant increase.

The Bank of Korea stated, "Going forward, as infection risk mitigation, automation to reduce labor costs, and non-face-to-face lifestyles continue, employment adjustments in mid-skilled jobs are likely to persist for a long time."

Job reallocation also appears to affect wages in the future. Looking at changes in wage growth by job characteristics, wage growth in mid-skilled jobs has slowed the most, intensifying wage polarization. The average wage growth decline for mid-skilled wage workers during 2020?2021 was -4.3% compared to the average from 2017?2019. In contrast, the wage growth decline for low-skilled and high-skilled workers was -3.5% and -2.3%, respectively.

Oh Sam-il, Deputy Head of the Employment Analysis Team at the Bank of Korea's Research Department, said, "As job polarization continues, wage polarization is also occurring accordingly. Wage growth in mid-skilled jobs has decreased significantly compared to the past since COVID-19."

In this regard, the Bank of Korea emphasized, "Changes in working conditions due to COVID-19 and the spread of automation are expected to continuously change corporate labor demand and household labor supply behavior. It is necessary to strengthen employment education and vocational training policies to reduce labor market mismatches arising from employment reallocation and to enhance social safety nets for vulnerable groups."

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