"This Is Why People Choose Large Corporations"... Average Monthly Wage: 7.16 Million Won vs 3.51 Million Won

Wage Gap Report from the Korea Institute for Industrial Economics and Trade
"Youth Employment Delays Also Affected"

An analysis has found that the wage gap between large corporations and small and medium-sized enterprises (SMEs) is widening, causing young people to delay entering the labor market.

According to the report "Dual Structure of the Labor Market and Youth Employment: Focusing on the Wage Gap between Large Corporations and SMEs," released by the Korea Institute for Industrial Economics and Trade (KIET) on the 28th, the average monthly wage at SMEs in 2024 was 3.51 million won, which is only about half of that at large corporations (7.16 million won). This finding is based on a comprehensive analysis of the employment status of wage workers aged 15 to 64 with income, using employment activity statistics records.

On April 27, many job seekers lined up to enter the venue at the KB Good Job Employment Fair held at COEX in Gangnam-gu, Seoul.

The actual wage ratio of SMEs to large corporations improved from 0.43 in 2015 to 0.49 in 2024. However, the nominal wage gap widened from 2.98 million won to 3.65 million won over the same period.

The report cited the recent example of performance bonus distributions in the semiconductor industry, including Samsung Electronics and SK hynix, explaining that the nominal wage gap between large corporations and SMEs has increased, making employment at large corporations increasingly important. The wage gap is widening rapidly over time, and employment at large corporations is analyzed to secure an absolute lifetime income advantage of over 1 billion won compared to SMEs.

It is becoming increasingly difficult to move from employment at an SME to a large corporation. The rate of job changes among employees at SMEs is more than twice as high as that of their counterparts at large corporations, but most move to other SMEs. Even among those in their 20s, who change jobs the most, only about 5-6% move from SMEs to large corporations.

The report concluded that, as the wage gap between large corporations and SMEs widens and job mobility through changing companies becomes more difficult, young people are choosing to delay entering the labor market. Based on the 2024 wage gap, it is estimated that four-year university graduates are postponing graduation by about one month and delaying labor market entry by approximately 3.6 months due to the dual structure of the labor market.

Min Soonhong, Associate Research Fellow at KIET, interpreted, "Young people are extending their job preparation period in order to secure better jobs." He went on to emphasize, "The government should implement policies to improve the actual working conditions for young people entering SMEs."

He added, "Programs that provide subsidies to companies to increase youth employment, such as the Youth Job Incentive Program, need to be improved so that they actually increase young people's real wages. Providing subsidies directly to young people to encourage initial entry would be more effective."

This content was produced with the assistance of AI translation services.