Length of Service Wage Gap Higher in S. Korea than Japan | Be Korea-savvy

Length of Service Wage Gap Higher in S. Korea than Japan


The results showed that the wages of those working in South Korea for more than 30 years were 3.11 times that of those working for less than a year, 2.37 times higher than in Japan. (image: Korea Bizwire)

The results showed that the wages of those working in South Korea for more than 30 years were 3.11 times that of those working for less than a year, 2.37 times higher than in Japan. (image: Korea Bizwire)

SEOUL, Dec. 26 (Korea Bizwire)Amid the controversy over the revision of the minimum wage act, which includes a weekday off, South Korean companies are facing a complicated wage system.

At the same time, South Korean companies have shown greater flexibility with wage increases than in Japan, meaning wages will naturally increase as service years increase.

The Korea Economic Research Institute reported these results based on raw data from the Ministry of Employment and Labor and basic statistics to compare the wage gap between workers at companies with more than ten employees.

The results showed that the wages of those working in South Korea for more than 30 years were 3.11 times that of those working for less than a year, 2.37 times higher than in Japan.

In order to receive twice the salary of a worker in the early days of employment, one has to work 20 years in Japan, but only 10 years in South Korea.

If one works more than 30 years, one can expect to receive 6.84 million won (US$ 6,077) in South Korea and 5.6 million won (US$4,975) in Japan as a monthly wage, resulting in a wage difference of 1.21 million won.

In other words, South Korea, which adopted a wage system based on Japan’s model during its economic development period, shows a higher acknowledgement of long service.

Since the economy relied heavily on employees’ working hours, the wage system of companies became complicated and deformed as the companies increased bonuses, overtime payments, annual leave allowances, performance pay and transportation expenses.

As a result, there are growing calls for companies to revamp their wage structure in accordance with the recent decision to include a weekday off in the minimum wage calculation.

However, both South Korea and Japan are experiencing softening wages due to slowing economic growth, extended retirement age and increased global competition.

H. M. Kang (hmkang@koreabizwire.com)

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