Korea’s wage disparity between workers widens amid stalled labor reform

2023.05.24 10:29:01 | 2023.05.24 13:06:52

[Image source: Gettyimagesbank]이미지 확대

[Image source: Gettyimagesbank]

The stalled labor reform of the Yoon Suk Yeol government has led to a wider wage disparity between regular and non-regular workers in South Korea, data showed Tuesday.

According to data released by the Ministry of Employment and Labor, the average hourly wage per employee at companies with one or more workers stood at 22,651 won ($17.2) as of June last year, up 14.4 percent from 19,806 won in the same month a year ago.

The average hourly wage for a full-time worker rose 15 percent on year to 24,409 won and for a contract worker 11.3 percent to 17,233 won.

Non-regular workers, however, earned 70.6 percent less than regular workers on an hourly basis, data showed, down 2.3 percentage points from 72.9 percent in 2021.

The wage gap between companies based on their size has also widened.

Permanent workers at a company with 300 or more employees earned 37,783 won per hour while temporary workers earned 65.3 percent per hour relative to the wage threshold, down 3.8 percentage points from a year ago.

For companies with less than 300 employees, the average hourly wage for full-time and contract workers relative to the threshold fell one percentage point and 1.9 percentage points, respectively, to 57.6 percent and 43.7 percent.

It is the first time that the disparity in the hourly wages by employment type and workplace size has widened since 2018.

[Photo by MK DB]이미지 확대

[Photo by MK DB]

Data showed that the number of workers on low pay that earn less than two-thirds of the medium wage climbed 1.3 percentage points from 2021 to 16.9 percent as of June last year. It was the first rise since 2013.

The labor ministry pointed to wage incentives as one of the reasons for the worsened disparity in the labor market, which suggests that a recovery in wage incentives after Covid-19 was found mostly in regular workers.

The win-win wage committee under the ministry that is in charge of addressing wage disparities also noted that the country’s wage disparity has worsened by the salary step system that has given a rise to a labor market that favors workers with longer working years in pay while there are fewer workers willing to work that long.

The government, in the meantime, is expected to unveil new measures that are aimed at addressing the worsened duality in the country‘s labor market in June.

“The local labor market is divided into 12 percent of large corporations and regular workers that are protected by labor laws and social safety nets and 88 percent of small and medium-sized enterprises and non-regular workers that lack protection,” said Labor Minister Lee Jung Sik.

“The ministry will announce new legislation that contains various measures in June,” he added.

Labor experts called for legislation that minimizes wage disparity and supports a fair labor market, citing Europe’s regulation on wage gaps. Measures include disclosure of information on wages and regulatory support for wage systems.

By Lee Jin-han and Han Yubin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]