The Korea Employers Federation announced on Oct. 29 that the starting annual salary of college graduates working for large corporations in South Korea is 31 percent higher than that of their counterparts in Japan, the former is much higher than the latter in terms of comparison to the respective countries’ per-capita GDPs as well, and the starting annual salaries of college graduates working for non-large companies in the two countries are close to each other.
According to the federation, the starting annual salaries of college graduates working for South Korean companies with at least 500 employees and Japanese companies with at least 1,000 employees are US$36,228 and US$27,647, respectively. In addition, their starting salary-to-GDP per capita ratios are 115.5 percent and 70.4 percent, respectively.
In contrast, the respective salaries are US$27,677 and US$26,630 in the case of companies with 10 or more employees. In other words, the salary gap between large corporation employees and overall employees is much wider in South Korea than in Japan. “This is attributable to the high-wage structure of large South Korean companies, that is, militant union activities led by unionized workers in large companies and a wide business capability gap between those companies and smaller firms,” the federation said.
It continued to say that the aggressive labor unions and seniority-based wage systems have led to the higher salary of large South Korean companies and the wide salary gap, adding, “The gap should be narrowed by means of wage systems focusing on individual employees’ jobs and achievements.”