In 2022, South Korea’s total monthly wage had surged to 3.99 million won, surpassing Japan’s 3.79 million won. (Image courtesy of Yonhap)
SEOUL, Mar. 17 (Korea Bizwire) – A fresh analysis reveals that wages in South Korea now surpass those in Japan across both major corporations and smaller enterprises, marking a significant shift over the past two decades.
The Korea Enterprises Federation (KEF) unveiled a comprehensive report titled “International Comparison and Implications of Korea-Japan Wage Trends” on Sunday, scrutinizing the wage differentials between Korean and Japanese firms from 2002 to 2022.
According to the report’s findings, the remuneration in Korean large and medium-sized enterprises, which lagged behind their Japanese counterparts by more than half in 2002, has outstripped Japan’s figures by 2022.
Comparing the aggregated monthly wages of salaried workers employed in establishments with 10 or more employees in both nations, Korea trailed Japan with 1.79 million won against Japan’s 3.85 million won in 2002.
However, by 2022, South Korea’s total monthly wage had surged to 3.99 million won, surpassing Japan’s 3.79 million won.
Delving into the specifics, wages at large Korean companies surged from 2.28 million won in 2002 to 5.88 million won in 2022, marking a robust growth rate of 157.6%. Concurrently, small and medium-sized enterprises saw their wages climb from 1.68 million won to 3.39 million won, a substantial increase of 111.4%.
In stark contrast, Japanese large enterprises experienced a decline from 4.83 million to 4.43 million, while SMEs witnessed a modest uptick from 3.16 million to 3.26 million. Notably, large enterprises in Japan saw a reduction of 6.8%, while SMEs observed a marginal increment of 7.0% during the same period.
These findings underscore a significant divergence in wage growth trajectories between the two nations, with South Korea witnessing a considerable widening of the wage gap over the past two decades.
This trend becomes even more pronounced when accounting for the variance in actual working hours between 2002 and 2022, as analyzed by KES.
While monthly hours worked in Korea dwindled by 13.8% over the said period (excluding overtime), total monthly wages saw an exponential surge of 122.3%. Hourly wages in South Korea similarly surged by 157.8%, climbing from 9,954 won in 2002 to 25,661 won in 2022.
In contrast, Japan experienced minimal fluctuations in both hours worked and wages over the same timeframe, with hourly wages stagnating at similar levels.
Rush hour (Image courtesy of Yonhap)
Furthermore, a comparative analysis of wage growth vis-à-vis company size and economic expansion in Korea and Japan indicates that wage growth in large Korean firms outpaced the growth in nominal gross domestic product (GDP) per capita.
Notably, from 2002 to 2022, the hourly wage growth rate of large Korean companies stood at an impressive 183.1%, surpassing the growth rate of nominal GDP per capita (154.2%). Conversely, in Japan, while nominal GDP per capita witnessed an 8.8% uptick during this period, hourly wages at large firms plummeted by 9.7%.
This discrepancy in wage growth rates has exacerbated the wage gap between large enterprises and small and medium-sized businesses in Korea compared to Japan. In 2022, the wage level of SMEs was notably lower in Korea (57.7) compared to Japan (73.7), using the wage levels of large and medium-sized enterprises in both countries as a benchmark.
This suggests a wider relative wage gap between large and small companies in Korea compared to Japan, with the former experiencing a sharper decline in relative wage levels for SMEs over the past two decades.
Notwithstanding Japan’s recent efforts to elevate wages, the stagnation observed over the past two decades underscores the urgency for comprehensive reforms aimed at fostering equitable wage growth and economic prosperity.
M. H. Lee (mhlee@koreabizwire.com)
