The scale of the company one works for, not individual experience or level of educational attainment, plays a significant role in widening the wage inequality gap among salaried workers, a research paper has found. (Image: Yonhap)
SEOUL, Feb. 7 (Korea Bizwire) — The scale of the company one works for (labor demand), not individual experience or level of educational attainment (labor supply), plays a significant role in widening the wage inequality gap among salaried workers, a research paper has found.
The paper revealed that wage inequality attributable to labor supply began to increase starting in 1994, reaching its peak in 2008 before falling.
Wage inequality heavily influenced by labor demand, meanwhile, consistently grew after 2008.
An excerpt from the paper drafted by Bank of Korea researcher Song Sang-yoon said: “In the last 20 years, the growing wage inequality experienced by South Korean regular employees is attributable to the scale of the entity that employs them and the type of industry they are in (labor demand) more than the individual laborer’s qualities such as education or experience (labor supply).”
Song’s findings were derived from analyzing data from employers with at least 10 laborers over extended periods of time. Roughly 6.6 million regular employees between the ages of 20 to 60 (from 1994 through 2015) and 790,000 employers (from 2000 to 2015) were included in the study.
The paper revealed that wage inequality attributable to labor supply began to increase starting in 1994, reaching its peak in 2008 before falling. (Image: Yonhap)
From 1994 to 2015, if wage inequality growth were to be pegged at 100 percent, 11.33 percentage points would be attributable to wage disparities across industries.
Once company scale is incorporated, this figure balloons to 44.03 percentage points, meaning that 32.7 percentage points are attributable to company size.
The tendency for larger companies to hand out bonuses more liberally as opposed to SMEs has been pointed to as a decisive factor in the wage discrepancies.
When bonuses are removed from the calculations and only fixed salaries are considered, the 44.03 percentage points in wage inequality due to industry and company scale dropped to 29.35 percentage points, a near 15 percentage point drop.
“When comparing the periods from 2000 to 2008 and 2009 to 2015, the gap in labor productivity between large companies and SMEs did not expand by a large margin. Large companies more actively sharing their successes with employees by giving more bonuses became the reason for the wage inequality gap widening,” added Song.
Lina Jang (linajang@koreabizwire.com)
