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Wage gap shrinks but is still considerable

May 08,2018
As the Moon Jae-in government struggles to pass a supplementary budget that it hopes will boost salaries at small and medium-sized companies and contribute to its income-led growth policy, studies show a durable wage gap between conglomerates and smaller companies - where some workers make less than 2 million won ($1,851.54) a month.

According to a recent study by the Ministry of Employment and Labor, employees at smaller companies make only 50 percent of what an employee at a conglomerate gets.

Overall, in any businesses with more than a single employee, the hourly wage of salaried employees as of June 2017 was 18,835 won, which was a 3.4 percent increase compared to 2016. The hourly wages of contract workers saw a sharper increase of 8.1 percent to 13,053 won, which has narrowed the gap between salaried and irregular workers compared to the previous year.

The hourly wage of an irregular or contract worker is now equivalent to 69.3 percent of regular workers, up 3 percentage points compared to 2016’s 66.3 percent.

However, the gap between conglomerate employees and those working at SMEs remained wide.

The hourly wage at companies with more than 300 employees was 30,704 won whereas that of SMEs with fewer than 300 employees was almost half that amount, 16,681 won.

The hourly wage for SME employees is 54.3 percent of that received by workers at conglomerates. If a conglomerate employee takes home 1 million won in monthly pay, an SME employee would receive 540,000 won.

Although that’s a slight improvement from the 52.7 percent of the previous year, it shows why university graduates would rather spend years trying to get into conglomerates rather than going to work for SMEs.

In fact, the hourly wages of a salaried worker at an SME can be even less than the 19,996 won that contract workers at conglomerates receive.

The benefits that contract workers get are much less.

The government study found that 94.7 percent of the salaried workers were subscribed to the government’s employment insurance and 97.8 percent were subscribing to the national pension fund.

On the flip side, only 68.7 percent of temporary or contract workers were subscribing to the employment fund while 54.9 percent were subscribing to the national pension fund.

These are two funds that are most crucial when losing a job or retiring.

The payments that the employees get when they lose their jobs comes from the employment fund while the national pension fund provides a steady income after retirement.

However, when it came to subscribing for insurance for occupational accidents, the rate was 96.8 percent.

A recent Statistics Korea study found that 40 percent of workers receive less than 2 million won a month.

The study, which was conducted in the second half of last year, showed that 10 percent of 20 million paid workers nationwide received less than 1 million won per month while 30.8 percent received between 1 million and 2 million won.

However, there have been some improvements in working conditions.

The average of actual working hours including overtime has been shrinking in recent years.

Last year, overall working hours including overtime amounted to 168.5 hours a month, which is 2.6 hours fewer than in 2016. For salaried workers, the average working hours reached 183.1 hour per month, 1.6 hours less than a year ago, and for contract workers it was 125.1 hors or 4.2 hours less.

In terms of working hours, people working in the lodging and restaurant sector topped the chart with 204.2 hours per month while people in manufacturing jobs worked 191.3 hours.


BY JANG WON-SEOK, PARK JIN-SEOK [lee.hojeong@joongang.co.kr]