Seoul’s business district (Image courtesy of Pixabay)
SEOUL, Feb. 17 (Korea Bizwire) — A new analysis has revealed that South Korea’s large companies offer significantly higher wages and wage growth rates compared to their counterparts in Japan and the European Union.
According to a report released February 16 by the Korea Enterprises Federation (KEF), the annual total wages at large Korean companies, excluding overtime pay, reached $87,130 in purchasing power parity terms, ranking fifth highest among 22 countries surveyed.
This figure is 8.2% higher than the average of 20 EU countries ($80,536) and 52.9% above Japan ($56,987). When measured against per capita GDP, Korean large company wages stood at 156.9% – significantly higher than both the EU average (134.7%) and Japan (120.8%). Among all 22 countries, Korea ranked third in this metric, following only Greece (166.7%) and France (160.6%).
The wage growth rate at Korean large companies has also been remarkable. Their wages increased by 157.6% from 27.41 million won in 2002 to 70.61 million won in 2022. In contrast, EU large companies saw an 84.7% increase during the same period, while Japanese large companies experienced a 6.8% decrease.
The wage gap between large and small companies in Korea has widened considerably. When setting large company wages at 100, small and medium-sized enterprise (SME) wages in Korea stood at 57.7%, compared to the EU average of 65.1% and Japan’s 73.7%. This represents a significant shift from 2002, when the ratios were 64.2% for Japan, 70.4% for Korea, and 76.6% for the EU average.
A striking wage gap has emerged in South Korea, with graduates from the top 20% of universities earning up to 50% more than those from the bottom 20%. (Image courtesy of Yonhap)
Korean SMEs’ annual total wages averaged $50,317, ranking 10th among the 22 countries surveyed. This figure is 19.7% higher than Japan ($42,022) but 4% lower than the EU average ($52,398).
“Wage increases without corresponding productivity improvements are unsustainable,” said Ha Sang-woo, head of economic research at the KEF. “We need to transition to a wage system based on job functions and performance.” He also cautioned that extending the legal retirement age could further improve working conditions at large companies, potentially reducing new hiring capacity and deepening labor market disparities.
The study defined large companies as those with 500 or more employees in Korea and 1,000 or more in Japan and the EU. SMEs were defined as companies with 10-99 employees in Korea and Japan, and 10-49 employees in the EU.
M. H. Lee (mhlee@koreabizwire.com)
