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The South Korean economy saw intensifying jobless growth from 2014 to 2019, with corporations offering fewer jobs despite increased sales. With rapid changes in social organization due to COVID-19, such as the shift toward remote work and automation, some project jobless growth to further accelerate in South Korea.

According to a Bank of Korea (BOK) report released Monday on the relationship between growth and employment in South Korea based on corporate data, the country’s employment growth rate rose by 0.29 percentage points with every percentage point increase in its corporate sales growth rate from 2014 to 2019. In particular, employment growth rose by 0.31 percentage points from 2014 to 2016 and by 0.27 percentage points from 2017 to 2019, the figure slowly dropping over time.

In other words, corporations increasingly offered fewer jobs despite sales growth during this time period. The BOK study found that decreases in employment growth were most noticeable in manufacturing companies with 300 or more employees and corporations in the service industry with less than 300 employees.

For manufacturing companies with 300 or more employees, employment growth rose by 0.37 percentage points with every percentage point increase in sales growth from 2014 to 2016, but only by 0.28 percentage points from 2017 to 2019. The BOK noted, “A big part of the reason these companies were unable to create as many jobs is that sales growth led to more investments in equipment such as machinery rather than to employment.”

For corporations in the service industry with less than 300 employees, employment growth rose by 0.28 percentage points with every percentage point increase in sales growth from 2014 to 2016, but by a much lower rate of 0.13 percentage points from 2017 to 2019. The BOK estimated that these companies were pessimistic about employment due to heightened competition that made it difficult for them to raise product prices to reflect their cost burden.

The study was based on business activity surveys from 2014 to 2019 of companies with 50 or more regular employees and a capital of 300 million won or more (roughly US$250,000), which numbered 41,467 in total. After controlling for yearly business factors and wage increases, the study gauged the correlation between corporate sales and the number of new jobs.

Meanwhile, some predict that corporate employment growth will further decline due to COVID-19. In its report titled “The future of work after COVID-19” released last February, the global consulting firm McKinsey & Company stated that over 100 million workers in six developed countries (the US, Germany, the UK, France, Japan and Spain) and two developing countries (China and India) may lose their current jobs by 2030.

The report noted existing jobs may disappear due to changes in our economic structure, such as remote work, e-commerce, and automation — all changes South Korea is experiencing as well due to COVID-19.

By Jun Seul-gi, staff reporter

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