Salaried jobs fall for 4th straight month, first time since COVID-19

The number of salaried wage workers in South Korea fell for the fourth consecutive month, the first such streak since the COVID-19 pandemic, government data showed Sunday. Since records began, wage employment has declined for four or more consecutive months only four times — including during the Asian financial crisis and the pandemic.

Analysts say the trend signals a shift toward a "low-hiring society," raising concerns that the labor market could prove dangerously fragile if the economy suffers a major shock.

According to an analysis of microdata from the Korean Statistical Information Service (KOSIS) under the Ministry of Statistics, the number of wage workers stood at about 22.487 million last month, down 11,000 from the same month a year earlier.

The decline began in April with a drop of 43,000, followed by 115,000 in May and 81,000 in June, marking four straight months of contraction.

The streak is the first since March 2020 through February 2021, when the COVID-19 pandemic dealt a severe blow to the labor market.

A sustained drop in wage employment is itself a rare occurrence in South Korea.

Since records began in July 1982, wage workers have fallen for four or more consecutive months only three times before now: from January 1998 to March 1999 (15 months) during the Asian financial crisis, for 12 months during the pandemic, and from January to April 1993 (four months).

Breaking down the July figures by industry, the professional, scientific and technical services sector recorded the steepest decline, shedding 86,000 wage workers. The sector covers research and development, architectural engineering, and professional legal and accounting services — fields where AI-driven job displacement may be taking hold.

Other sectors posting declines included wholesale and retail trade (down 72,000), construction (down 71,000), membership organizations and personal services (down 44,000), education services (down 27,000) and manufacturing (down 26,000).

By age group, workers between 15 and 29 accounted for the sharpest drop, falling by 210,000, while those in their 60s rose by 87,000. The 20–24 age bracket saw the steepest single-group decline at 138,000, followed by the 40–44 bracket (down 106,000) and the 25–29 bracket (down 87,000).

The fall in wage employment was offset by a rise in non-wage workers — a category that includes the self-employed and unpaid family workers. Last month, non-wage workers numbered about 6.649 million, up 119,000 from a year earlier, lifting total employment by 108,000.

In May, however, a 75,000 increase in non-wage workers was not enough to offset a 115,000 drop in wage workers, pushing total employment down by 40,000 — the first monthly decline in one year and five months.

Among non-wage workers, the self-employed — excluding unpaid family workers, whose numbers are falling — rose by 150,000 in July.

Among self-employed workers with employees, the wholesale and retail trade sector posted the largest gain (up 30,000), followed by health care and social welfare (up 19,000) and transportation and warehousing (up 12,000).

Solo self-employed workers without employees grew most sharply in membership organizations and personal services (up 33,000), professional, scientific and technical services (up 30,000), real estate (up 22,000) and information and communications (up 19,000).

By age group, self-employment grew most among those in their 30s (up 64,000) and those in their 60s (up 36,000).

Wage workers generally enjoy broader social safety net coverage — including employment insurance, industrial accident insurance and severance pay — along with regular paychecks, giving them relatively stable incomes and job security.

Non-wage workers such as the self-employed, by contrast, see business conditions and sales fluctuations feed directly into their incomes, and they have weaker social insurance protection, leaving them more exposed to income volatility and livelihood risk.

The government attributed the slowdown in new hiring partly to uncertainty stemming from the war in the Middle East, which it said has led companies to delay recruitment.

At the same time, officials noted that the growth of self-employment in professional, scientific and technical services — beyond the traditionally strong wholesale and retail sectors — suggests that startup support policies focused on advanced technology are beginning to show some effect.

But economists warn that if an economic shock hits while the share of non-wage workers remains elevated, the labor market could absorb a far heavier blow.

Kim Gwang-seok, head of economic research at the Korea Economic and Industrial Research Institute, said the shift away from wage employment signals that South Korea is becoming a low-hiring society. "Because the labor market is so difficult, a significant number of people are likely turning to involuntary self-employment as an alternative," he said.

He added that wage workers resemble aircraft carriers in terms of stability, while a proliferation of the self-employed is like a fleet of sailboats. "If macroeconomic risk factors materialize, the labor market could absorb an even greater shock at a time when the share of wage workers is already declining," he warned.

Yang Jun-seok, a professor of economics at Catholic University of Korea, said that if the trend continues, employment figures may not look too bad on the surface, but real incomes could fall. "A drop in income could weigh on the economic recovery," he said.

He added that when universities and state-run research institutes cut support, non-contract workers are typically the first to go. "That dynamic may partly explain why wage employment in professional, scientific and technical services is shrinking while solo self-employment in the same sector is growing," he said.

An official at the Ministry of Economy and Finance said that because employment tends to lag economic conditions, a resolution of the Middle East conflict — including its effect on oil prices — could allow the warmth of economic recovery to spread to the labor market, reviving new hiring and improving wage employment.