Non-wage Growth
Productivity growth without an increase in real wages has been most noticeable in Korea among the major OECD countries.
In his report on an international comparison of productivity growth without real wage increases published on April 27, Park Jong-kyu, a researcher at the Korea Institute of Finance, pointed out that real wages and labor productivity worked in tandem before the global financial crisis of 2008, but the gap has widened since then.
The nation’s real wages (contribution to social security included) decreased by 2.3 percent between 2007 and 2012. In contrast, the number went up 19.4 percent from 1997 to 2002, and 17.6 percent from 2002 to 2007. Among 28 OECD countries, only 11 countries experienced more wage cuts than Korea in 2012 (or 2011) compared to 2007.
However, if Portugal, Italy, Ireland, Greece, and Spain — the five most at-risk European economies during the European sovereign debt crisis — and 10 nations outside the top 40 in GDP per capita are excluded, only the UK, Japan, and Israel suffered more from a steeper rate of decline in real wages than Korea.
In comparison, Korea’s labor productivity, which is calculated by dividing GDP by the number of workers, rose 9.8 percent between 2007 and 2012. Among 18 countries, the nation’s productivity rose most rapidly during the period.