[The Editors' Verdict] How Can We Stop the Widening Polarization?

Income polarization is spreading following real estate and stock market disparities. The strengthening of real estate regulations has caused housing prices and jeonse (long-term lease) prices to skyrocket, resulting in a surge of 'byeorakgeoji' (people who suddenly become poor due to housing price spikes). While some people made money by capitalizing on the rapid rise in stock prices, more people missed the opportunity and were left out, experiencing 'FOMO (Fear of Missing Out)'. Income polarization is more shocking than asset polarization because it arises from industrial changes driven by technological shifts and the impact of COVID-19. The pandemic has widened the gap between advanced industries and traditional industries, between leading companies and others within advanced industries, and between large corporations and small and medium-sized enterprises (SMEs). Industrial polarization inevitably leads to income disparities among workers. Employees at leading companies in advanced industries have seen significant salary increases. According to an analysis by CXO, a corporate analysis research institute, the number of companies with an average annual salary per employee exceeding 100 million won increased by 16 to 68 in 2022 compared to 2019. However, according to the Small and Medium Business Research Institute, the average salary increase in SMEs was only 4%.

The income gap among workers, which widened due to income-led growth policies, has further expanded because of COVID-19. Changes in lifestyle and industrial transformation have led advanced technology companies to prosper. In contrast, self-employed businesses and SMEs concentrated in face-to-face service industries saw their sales plummet. Shopping, meetings, and education moved online; work was done from home; leisure activities shifted to gaming; and interest in medical health increased.

Riding this trend, industries such as semiconductors, information and communications, secondary batteries, electric vehicles, and medical bio have seen profits soar, and the incomes of workers in these sectors have risen. The abundant liquidity in the market due to COVID-19 also fueled active stock trading, leading securities firms to pay high performance bonuses to their employees. However, the situation for most workers is quite different. Instead of income increases, jobs have decreased. According to recent statistics from Statistics Korea, as of February, the number of people who feel unemployed was 4.68 million, with the youth perceived unemployment rate reaching a record high of 26.8%.

The future poses even greater challenges. In advanced industries, ideas determine corporate competitiveness and workers' incomes. In contrast, jobs in traditional industries such as face-to-face services will not return even after the pandemic ends. Moreover, advanced industries are characterized by a winner-takes-all market dominated by top companies. Highly skilled and creative personnel become more important, and their compensation rises rapidly. Meanwhile, simple labor jobs are increasingly replaced by automation and robots, accentuating the K-shaped polarization. These changes are unstoppable because they provide goods and services more cheaply, conveniently, and safely. Workers and ordinary people must respond dynamically. Signs are emerging: as demand for IT developers surges and supply cannot keep up, coding academies are crowded with everyone from young students to office workers. If there are enough skilled workers in advanced industries and general workers can utilize advanced technologies, the pressure of polarization will naturally ease.

The more difficult issue than finding solutions to polarization is implementing them in reality. Meticulous government policies are required. Innovation must spread to traditional industries to raise incomes for low-wage groups. With remote work becoming commonplace, distinctions between regular and non-regular workers are less important; the focus should be on enabling all workers to utilize skills and increase their incomes regardless of employment type. People are the agents of innovation. Education systems must be designed to train the workforce in line with technological changes, and training systems must allow workers to upgrade their skills whenever necessary. Labor market systems should be dynamic, enabling easy movement to growth sectors and linking wages to job performance.