It has become harder and harder to climb up the ladder for workers in South Korea with the pay gap between major conglomerates and small- and mid-sized firms, as well as full-time and temporary workers widening, the central bank’s study found.

According to a report released by the Bank of Korea on Monday, workers at large conglomerates having 300 or more on payroll earned 1.7 times higher salary than their counterparts at SMEs in 2014, up from 1.1 times in the early 1980s. The widened gap was largely attributable to the so-called the wage premium of big firms referring to the extra wages paid by large companies for the companies’ brand value regardless of workers’ educational level, job experience or age. The study found that such wage premium surged from 6.3 percent to 46.1 percent over the same period.

However, it has been getting harder for workers at SMEs to move to large firms and non-regular workers to become regular ones over the past years. Between 2015 and 2016, just 2.0 percent of employees at SMEs moved to big firms, down from 3.6 percent from 2004 to 2005. Only 4.9 percent of temporary workers got permanent jobs over the same period, compared to 15.6 percent from 2004 to 2005.

The labor market in South Korea is more rigid than that of other major countries. On average, just 22 percent of temporary employees in South Korea are turned into full-time workers three years after they started their jobs, compared to 70 percent in the Netherlands, 60 percent in Germany and 46 percent in Spain.

“The polarized labor market would hinder the economic growth in the long term,” the report said, urging that related parties should come up with measures to address the issue. It added that they need to reexamine salary-setting rules of each business and industry by focusing more on job functions than a company’s brand awareness, and find ways to add flexibility to payment system and working environment.

By Lee Yu-sup and Choi Mira

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