Ordinary Wages
According to the Korea Employers Federation’s recent data, 369 companies that finished this year’s wage negotiations raised their wages by an average of 8.2 percent, 4.2 percentage points higher than a year ago. The companies’ profitability is likely to deteriorate given that those listed on the Korean stock exchange showed a record-low business profit rate of 4.6 percent since the 2008 financial crisis last year.
“Such a high increase is because some of the corporations included regular bonuses in the ordinary wage in accordance with the ruling of the Supreme Court,” the federation explained. It added, “The rate of wage increase was particularly high in major corporations where the ratio of regular bonuses is high.”
The average rate was 4.2 percent, 0.2 percentage points up from the previous year, for those that did not make any adjustment regarding the scope of ordinary wages. Meanwhile, the rest of the 369 recorded a rate of increase of 13.8 percent on average. Specifically, it was 26.7 percent for those employing 1,000 or more persons, 9.6 percent for 100 to 299 employee companies, 6.3 percent for 300 to 499 employee companies, and 15.8 percent for 500 to 999 employee companies.
“The increase in the pay growth rate caused by the adjustment of the scope does not mean that the employees’ salaries increase by the same margin,” said the federation, continuing, “Instead, it acts as a factor of wage increases by resulting in an increase in benefits linked to ordinary wages, such as overtime pay.”
In the meantime, the management and employees had an average of 6.5 rounds of wage negotiations for 2.6 months this year. The numbers went up from 5.2 rounds and 1.9 months compared to the previous year, respectively. “This was because of various conflicting labor issues such as the scope of ordinary wages and the obligatory application of retirement at 60,” the organization commented.