Favorable Salary Comparisons
It has been reported that the average annual salary of the top 250 domestic companies is about 6 million won higher than that of American companies.
On August 7, a business management evaluation group “CEO Score” (CEO Park Ju-geun) compared the salaries of the top 250 Korean companies and those of major American companies at the end of last year, and announced that the annual average salary of Korean employees is 63 million won, which is higher than the 57 million won (US$53,526.00) of American employees.
For this comparison, CEO Score chose the top 250 Korean companies in terms of annual turnover, whilst selecting the 250 American companies listed on the 500 Standard & Poor’s (S&P) with large annual salary gaps between the CEO and average employees.
US businesses do not make employees’ annual salaries public in their business reports, so CEO Score took the data from a report on prevailing average salaries by industry, which Bloomberg had obtained from the US Department of Labor to compare salary gaps between CEOs and average employees.
Therefore, the numbers in this report are based on the average salary by industry rather than per individual employee. In the calculation on average annual payments, Bloomberg applied the indices by industry, including allowances based on the average hourly payment by industry for production and non-supervisory workers.
According to the analysis, the Korean company with the highest average salary is Nomura Financial Investment at 140 million won. Companies with an average salary over 90 million won included SK Telecom at 98 million won, Korea Securities Finance Corporation at 96 million won, Hyundai Motor at 94 million won, Export-Import Bank of Korea at 93 million won, Kia Motors at 91 million won, SK Chemicals, LG International Corporation, and Korea Exchange Bank at 90+ million won.
The American company with the highest average salary was First Energy at 95 million won. Companies with an average salary over 90 million won included Northrop Grumman Corporation and IBM at 95+ million won; and United Technologies, Lockheed Martin, and Boeing at 93 million won. Famous investment bank Goldman Sachs had an average of 81 million won, and J.P. Morgan ranked 9th with 87 million won.
Defense-related, electrical power generation, and investment banking industries showed higher average salaries in the US, while securities and automobile industries did so in Korea.
CEO Score explained these salary differences would be bigger when considering the sizes of the targeting companies and the GDPs per person of the two countries.
The total turnover of the 250 selected American companies was 7.594 quadrillion won, which is 3.5 times more than the 2.152 trillion won of Korean companies. The total net profit of those American companies was 641 trillion won, which was also 7.5 times higher than the 85 trillion won of Korean companies.
According to the International Monetary Fund, Korea’s GDP per person in 2012 was also US$23,679.00, which was less than half of the American US$49,601.00.
However, it is difficult to determine whether the Bloomberg’s American salary data used by CEO Score is adequate for parallel comparisons with Korean salary data. The Korean data calculated the salaries of “all employees under executive-level persons,” while the American data used the salaries of “production and non-supervisory workers.”
CEO Score said, “It is impossible to say that the data matches 100%, since Korea and the US have different hiring and payment systems, but it would be possible to get a general idea through comparison.”