"4 out of 10 Low-Income Unemployed Workers Lost Jobs Due to COVID-19"

3-Day Hankyungyeon Policy Proposal Report
Four out of Ten with 50% Median Income Unemployed Due to COVID-19

"Enhance Private Employment Capacity by Labor Market Flexibility"

Unemployment benefit applicants are entering the Western Employment Welfare Plus Center in Mapo-gu, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Chaeseok] A study has revealed that four out of ten low-income individuals earning around 50% of the median income lost their jobs due to COVID-19.

On the 3rd, the Korea Economic Research Institute under the Federation of Korean Industries released a policy recommendation report titled "The Impact of COVID-19 on the Job Retention Rate of Vulnerable Groups in 2020," containing these findings.

The institute investigated whether people maintained their jobs in 2020 compared to before the COVID-19 pandemic in 2019, categorized by social strata. The analysis showed that the decline in job retention rates was greater among vulnerable employment groups such as low-income earners, youth, and women than among high-income earners and men.

First, the job retention rate of the lower-income group earning about 50% of the median income dropped by approximately 8.4 percentage points (p). During the same period, the middle-income group earning between 50% and 150% of the median income saw a decrease of about 3.2%p, while the high-income group earning over 150% of the median income experienced almost no change.

The job retention rate for youth decreased by about 4.3%p, and for women by about 3.5%p during this period. The decline rate for women’s job retention was nearly double that of men’s 2.0%p. This suggests that COVID-19 had a more negative impact on vulnerable employment groups.

The job retention rates of workers in industries where employment decline was repeatedly reported, such as restaurants, arts, sports, and leisure-related services, also fell due to COVID-19.

The job retention rate for workers in accommodation and food services dropped by about 8.4%p. For arts, sports, and leisure-related services, it fell by about 8.8%p.

The unemployment rates showed similar trends. Among low-income unemployed individuals, 4 out of 10 lost their jobs due to COVID-19, whereas among the middle-income group, it was 3 out of 10.

In accommodation and food services, about 3 out of 10 unemployed workers lost their jobs because of COVID-19. In arts, sports, and leisure-related services, 5.5 out of 10 unemployed workers lost their jobs due to the pandemic.

The Korea Economic Research Institute suggested that rather than the government printing jobs by releasing tax (fiscal) funds, it is preferable to encourage private companies to create jobs through employment flexibility. They emphasized the need to establish systems in advance since it is difficult to respond improvisationally during a pandemic.

Senior Research Fellow Yoo Jinseong of the institute said, "We need to build a flexible labor market to minimize the period during which vulnerable employment groups are excluded from and re-enter the labor market," adding, "It is necessary to consider measures to ease employment rigidity and regulations and increase incentives to strengthen the private sector’s capacity for job creation."

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