According to his study, the average monthly fixed wage of a worker at a prime contractor was 3.23 million won, but that of a worker at a subcontractor was 2.32 million won, or 28.1 percent lower. (image: Kobiz Media / Korea Bizwire)
SEOUL, July 14 (Korea Bizwire) – The wage differential between general contractors and subcontractors has worsened to a critical level, and corrective measures should be applied to curb the trends.
The Economic and Social Development Commission held an open forum to discuss the structural situation of prime contractors and subcontractors and its remedies for them to grow together.
At the discussion session, Ahn Ju-yeop, a senior research fellow at the Korea Labor Institute, said in his keynote speech that wage levels become wider as the subcontracts go from primary to secondary and tertiary levels.
According to his study, the average monthly fixed wage of a worker at a prime contractor was 3.23 million won, but that of a worker at a subcontractor was 2.32 million won, or 28.1 percent lower.
When extra compensation is added, the disparity became even wider. The monthly wage and salary of a prime contractor worker was 5.59 million won, but that of a subcontractor worker was only 2.86 million won, representing only 51.1 percent of a prime contractor’s earnings.
Ahn said, “At the prime contractors, almost all employees receive bonuses and severance pay, but among the workers at subcontractors, only 68.9 percent of them received bonuses and 86.9 percent were able to receive severance pay.”
To balance the wages between prime contractors and subcontractors, he urged the government to set policies obliging prime contractors to share 30 percent of excessive profits to improve the labor condition of the subcontractors.
“In addition, considering the fact that some of the workers at the subcontractors receive minimum wage, the minimum wage level should be raised to reduce the wage gap,” he added.
By John Choi (johnchoi@koreabizwire.com)
