Payroll & Compensation

Korea Should Say No to Wage Increases

Over the past decade, the average employee wage in Korea has risen higher than company revenues. To avoid things like steeper inflation, these increases must level out.

By Zee Johnson

In July of this year, an analysis by the Federation of Korean Industries found that of listed organisations, the average company revenue rose 12.5% between 2011 and 2021. Also during this period, the average annual wage per employee shot up 43.4%, causing leaders in the country to share the sentiment that compensation has risen far too high.

Choo Kwang-ho, the company’s chief of economic research, thinks this decades long increase is one of the culprits behind the current increased cost of living and goods. “Excessive wage hikes in proportion to productivity growth will not only pull down companies’ competitiveness but will also incite product price hikes and lead to inflation,” he told the Korean Harold.

The analysis revealed that the average annual salary per worker jumped by 24.23 million won, from 55.93 million won (approx. $42,780) in 2011 to 80.16 million won (approx. $61,300) in 2021. And of the listed companies’ revenue per employee, that number increased by 140 million won, to reach 1.1 billion won.

Following the release of these figures, Kwang-ho advises companies to slow compensation increases to remain competitive in today’s market.

“For companies to survive and keep jobs amid uncertainties in the international and domestic business environment, steep wage hikes should be avoided, and labor and management should work together to raise productivity,” he told the publication.

Of listed industries, travel agencies and travel assistance service providers saw the steepest wage hikes, rising by 10.1 percentage points. The following industries weren’t far behind.

  • film and broadcast products and distributors (9.6%);
  •  rubber products manufacturers (7%);
  • construction technology and engineering service providers (6.7%);
  • print publishers (6.5%);
  • electricity and telecommunication builders (6.%);
  • food, beverage and tobacco wholesalers (5.8%);
  • processed metal manufacturers (4%);
  • shipbuilders (3.8%); and
  • chemical fiber manufacturers (3.7%).
Tags: APAC News, APAC September 2022, Payroll

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