A recent report shows the wage gap in Korea has been widening between large and small companies and between regular and irregular employees.
The average monthly wage at enterprises with fewer than 300 employees remained at 2.04 million won ($1,830) last year, accounting for 56.7 percent of the corresponding figure for corporations with 300 or more workers. The proportion was down from 59.8 percent a decade earlier, according to the report released by the Korea Labor Institute.
The most severe income inequality existed between irregular workers at small and medium-sized enterprises and regular employees at large companies. The former’s average hourly wage stood at 40.7 percent of the latter’s in 2014, compared with 41.6 percent in 2004.
According to separate data from the government, nearly all workers at large corporations receive severance pay or bonuses, while only about a third of laborers at SMEs do.
Under these polarizing wage conditions, it is only natural for many young job seekers to try to enter big businesses for years after graduating from college. It is also unavoidable that employees at small companies are eager to move to workplaces that offer higher wages.
A lack of skilled workers makes it difficult for many SMEs to improve competitiveness and increase profits, thus forcing them to continue to rely on low-paid irregular workers.
Government policymakers and politicians have been discussing ways to make the country’s welfare system more effective and substantial. But their efforts will have a limited effect on narrowing the inequality between rich and poor as long as the widening wage gap is left unaddressed. Without tackling the matter urgently, it may be a matter of time before the discontent among low-paid workers, especially those hired on an irregular basis, reaches boiling point.
A tripartite commission comprised of representatives from the government, management and labor needs to focus its ongoing discussion about improving the labor market structure on how to ease the wage inequality.
With most of the country’s major corporations set to freeze or slash their number of new recruits this year, it is necessary to provide more support for SMEs to help increase wages for their employees.
A recent study by a local research institute showed that, among the 32 surveyed members of the Organization for Economic Cooperation and Development, Korea placed second-highest in the proportion of low-income workers earning less than two-thirds of the median wage.
Aside from efforts to boost wages, measures should be strengthened to settle the increasing amount of overdue pay, which stood at about 1.31 trillion won last year, the largest since 2009. It is no coincidence that nearly 70 percent of unpaid wages are owed by small workplaces.
