Office workers in Yeouido stepping out to eat during their lunch break (Image courtesy of Yonhap)
SEOUL, May 14 (Korea Bizwire) – While official statistics appear to show South Korea’s minimum wage closing in on the average for developed economies, experts argue this effect is an illusion stemming from how the country calculates average wages compared to international standards.
According to a report on minimum wage trends and global comparisons released on May 13 by the Korea Labor & Society Institute, the average minimum wage across the 28 OECD member countries with such systems was $7.40 in 2022.
South Korea’s minimum of $7.10 was $0.30 below the OECD mean, ranking 15th among the 28 nations, around the middle of the pack. Just 10 countries topped $10 per hour, led by Australia at $14.50, Luxembourg at $13.90 and New Zealand at $13.30.
However, when adjusted for purchasing power parity, Korea’s $9.50 minimum outpaced the $9.00 OECD average, lifting its ranking two spots to 13th.
These standings belie criticism that Korea’s approach to calculating average wages flattered its minimum wage in relative terms. The nation bases its OECD reporting on wages for full-time workers, including temporary staff, at businesses of all sizes according to its Supplement on Employment Conditions survey.
In contrast, Japan reports figures only covering firms with five or more employees, while European Union members submit data for those with at least 10 workers.
When the labor institute adjusted its analysis to restrict wages to full-time staffers at companies with five or more employees based on the employment survey, Korea’s minimum amounted to just 52.3% of the average regular pay, ranking 12th. Compared to typical total compensation, that share dropped to 48.3% for 18th place.
Refining further to the standard used by the EU of workplaces with 10 or more staff put Korea at 39.3% of regular pay (18th) or 32.7% of total pay (26th) relative to the minimum.
“It’s not entirely wrong to include wages from the informal sector of very small workplaces,” acknowledged Kim Yoo-sun, the institute’s director. “But the wage data for those under five employees, which are exempt from even basic labor laws, is unreliable.”
Kim questioned why minimum wage policies aimed at lifting low-income workers and reducing inequality would incorporate compensation for casual and temporary staff at tiny businesses, but exclude government employees like teachers who are higher-paid professionals.
“The absurd reality is that as more non-regular, low-wage workers proliferate, Korea’s minimum relative to the average will appear higher,” Kim said, noting OECD guidelines recommend comparing minimums to full-time employee pay to avoid distortions from including part-timers.
“Including non-regular workers’ wages may be inappropriate when determining an adequate minimum wage level,” the labor expert argued.
M. H. Lee (mhlee@koreabizwire.com)
