In a remarkable economic turnaround, South Korea’s worker wages have eclipsed those in Japan, a report from the Korea Enterprises Federation (KEF) highlighted, marking a significant shift over the past twenty years. The comparative analysis delves into the wage evolution within both nations, spotlighting South Korea’s rapid wage growth and the expanding wage gap between different enterprise scales.
The KEF’s study draws a comprehensive picture by comparing total monthly wages of fully employed workers from 2002 to 2022 in South Korea and Japan. The year 2002 saw South Korean workers earning significantly less than their Japanese counterparts. Fast forward two decades, and the scenario has flipped; South Korea’s average monthly wage now stands at 3,998,000 won, overtaking Japan’s 3,791,000 won. This growth is notable in both large companies and small to medium-sized enterprises (SMEs), with South Korean wages outstripping those in Japan across the board.
The disparity in wage growth rates between the two countries is stark. South Korea’s wages in large companies have soared by 157.6 percent since 2002, contrasted with a 6.8 percent decrease in Japan. SMEs in South Korea also saw a substantial wage increase of 111.4 percent, far outpacing the modest 7.0 percent rise in Japan.
Adjusting for working hours, the findings become even more pronounced. South Korea witnessed a substantial reduction in monthly working hours coupled with a significant wage increase, leading to an hourly wage jump of 157.8 percent over the two decades. Meanwhile, Japan’s hourly wages remained relatively stagnant, with large companies even experiencing a decrease.
Economic growth rates, a pivotal factor influencing wage trends, further underline the differences between the two nations. In South Korea, the hourly wage growth in large companies notably exceeded the nominal GDP growth per capita. Conversely, Japan’s marginal GDP growth did not translate into higher wages, especially in large enterprises where hourly wages actually diminished.
The wage gap within South Korea has also intensified, particularly when comparing large firms to SMEs. In 2022, the relative wage levels between these groups in South Korea showed a broader disparity than in Japan, underscoring a significant wage inequality issue that has magnified over the years.
This comprehensive analysis by the KEF not only sheds light on the dramatic wage growth in South Korea compared to Japan but also underscores the need to address the increasing wage inequality between large corporations and SMEs, a challenge that is becoming increasingly pronounced in South Korea’s evolving economic landscape.
