NABO Industry Trends and Issues (No. 20)
Published on 27 May 2018
Published by Industry & Employment Analysis Division of the Economic Analysis Bureau
I. Employment, Population and Pension (Insurance) Trends
(Employment Trends) As of April 2019, the number of employed people totaled 27 million 38 thousand, increasing by 171 thousand YoY, among which 48 thousand (1.2%) more youths (ages 15-29) found new employment YoY. In industry specifically, the number of employed people decreased in manufacturing (-1.2%), construction (-1.5%) and power, gas, waterworks and waste management (-1.0%), whereas jobs in the services sector increased (1.3%).
(Population Trends) As of April 2019, the registered population is 51.84 million, having increased by 50 thousand YoY. Among the registered population in April 2019, there are 6.57 million infants and children (ages 0-14), 37.5 million people of working age (ages 15-64) and 7.77 million seniors (age 65+).
(Pension (Insurance) Trends) Insurance premium revenues for life insurance and non-life insurance in the 4th quarter of 2018 amounted to 60.4 trillion won, a 2.9% increase YoY. The volume of life insurance payments was 24.4 trillion won and the volume of incurred losses claimed through non-life insurance was 16.0 trillion won, each having increased by 9.8% and 7.6% respectively, YoY.
II. Analysis of the Wage Gap between Companies of Different Sizes within the Korean Labor Market
The Korea Labor Panel Survey (2009-2017) was used to analyze whether a wage gap exists in the Korean labor market depending on company size and to estimate the respective wage-deciding factors of large conglomerates, medium-sized and small enterprises. In the analysis model, the actual wage per hour was set as the dependent variable with explanatory variables including company size, education and training, age, period of service, whether one has joined a labor union, gender, regular or irregular status, occupational category and industry category. As a result, it was found that a wage gap of 2.5-6.8% exists in the Korean labor market depending on the size of the company, while other factors such as educational background, age, gender, regular or irregular status, years of service, occupational category and industry category also have a meaningful impact on the wage gap. The Korean labor market appears to have a structure in which a wage gap occurs depending on the size of company even when individual employees’ attributes are identical. Therefore, policy efforts are required to address this issue.
III. Impact of Demographic Changes on Local Economic Growth
An analysis of the gross regional domestic product (GRDP) and demographic documentation of the 226 cities, provinces and districts in Korea over 2003-2016 by using a panel fixed effect model revealed that the GRDP decreased 4.5% when the ratio of that region’s senior population aged 65+ increase by 1%p, and the GRDP increased by 1.6% when the ratio of that region’s working age population increase by 1%p. Also, the negative impacts of increased senior population and the positive impacts of increased working age population appeared to be more significant in the metropolitan area compared to the non-metropolitan area. Considering that there have been previous studies claiming that the negative impacts of aging on economic growth can be offset through an increase in economically active seniors as well as through alternative labor forces including industrial robots and AI technology, it is necessary to conduct further studies that incorporate changing industry structure and expanded capital investments incurred by population aging.