Korea’s hourly wage increased by 157.8%
Korea’s average monthly salary is $3,415, while Japan’s is $3,239
An analysis has shown that the average wage of South Korean workers is higher than that of workers in Japan. However, unlike Japan, the wage gap between large corporations and small and medium-sized enterprises (SMEs) in Korea has widened.
The Japanese economy has been stagnant for decades with little wage growth. In contrast, South Korea’s large corporations have seen rapid wage increases over the past 20 years.
A report titled ‘Korea-Japan Wage Trend International Comparison and Implications,’ released by the Korea Management Association on the 17th, compares the monthly wages of regular workers (employed in companies with ten or more employees) in Korea and Japan for 2002 and 2022.
In Korea, the average monthly wage has increased from 1.798 million won ($1,535) in 2002 to 3.998 million won ($3,415) in 2022. This represents a substantial increase from a figure that was less than half of the monthly wages of regular workers in Japan in 2002 and now nearly equals Japan’s total monthly salaries.
Between 2002 and 2022, Japan’s average monthly wage decreased from 3.854 million won ($3,294) to 3.791 million won ($3,239), while Korea’s increased to surpass Japan’s.
When comparing by company size, the wage of large corporations in Korea was 2.284 million won ($1,951) in 2002, and the salary of SMEs was 1.608 million won ($1,374). In Japan, large corporations’ wages were 4.836 million won ($4,133) in 2002, and SMEs’ wages were 3.106 million won ($2,654), indicating that Korea was nearly half as much behind.
As of 2022, the wage of large corporations in Korea is 5.884 million won ($5,030), and the salary of SMEs is 3.399 million won ($2,904). In the same period, Japan’s large corporation wage was 4.434 million won ($3,788), and the SME wage was 3.269 million won ($2,794).
From the Purchasing Power Parity (PPP) exchange rate perspective, which reflects the price level, the estimated wage in Korea for 2022 is around 6.57 million won, which equals $4,993. On the other hand, the estimated wage in Japan is around 5.4 million won, which equals $4,061.
Although Japan was ahead in all sectors, including large corporations and SMEs, in 2002, Korea overtook Japan in 2022.
The wage increase rate of large corporations in Korea over 20 years is 157.6%, while that of large corporations in Japan is 6.8%. Similarly, the wage increase rate of SMEs in Korea is 111.4%, significantly higher than the 7% increase in Japan.
However, the wage gap between large corporations and SMEs is ultimately analyzed to be more prominent in Korea than in Japan. When setting the wage of large corporations as 100, the wage level of SMEs in Korea decreased from 70.4 in 2002 to 57.7 in 2022, indicating a widening gap.
In the same period, Japan decreased from 64.2 to 73.7. These indicators appear this way because wages in large corporations in Korea have increased more relative to Japan, and salaries in SMEs in Japan have increased more.
The Korea Management Association predicts that the wage increase rate difference will widen even more when considering changes in working hours in both countries. From 2002 to 2022, Korea’s monthly working hours decreased by 13.8%, and the total monthly wage increased by 122.3%.
When these data are converted to hourly wages, Korea’s hourly wage increased by 157.8% from 9,954 won ($8.51) in 2002 to 25,661 won ($21.93) in 2022. Japan’s working hours and salaries almost remained the same during the same period.
Ha Sang Woo, the head of the Economic Research Department at the Korea Management Association, said, “Japan has been making efforts to increase wages recently, but this is due to the wage level stagnating over the past 20 years. In Korea, the wage gap caused by the high wage increases accumulated by large corporations and the deepening dual structure resulting from this is causing various social conflicts, so it seems necessary for high-wage large corporations to restrain wage increases as much as possible.”
He also pointed out the need to work on expanding jobs for young people and improving the business conditions of small and medium-sized partner companies.
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