Corporate pay gap returns to pre-pandemic level: data



While the pay gap between large conglomerates and small and medium-sized businesses here may have narrowed during the pandemic years, the disparity appears to have returned to pre-pandemic levels more recently, according to a published report. tuesday.

According to a report by the Korea Chamber of Commerce and Industry, the average salary in SMEs with less than 300 employees remained at 60.78% of that of large companies with 300 or more employees in 2019.

The disparity soared to 63.29% in 2020 as companies refrained from raising wages, citing their pandemic-hit operations. But big companies started making wage increases last year, widening the gap again to 61.72%.

The report says the average wage growth rate in conglomerates was 6.4% in 2018, 0.3% in 2019 and minus 2.8% in 2020. But the figure jumped to 6.6% in 2021, returning to the pre-pandemic rate.

In contrast, the wage growth rate for SMEs was 4.4% in 2018, 3.7% in 2019 and 1.2% in 2020. Last year, the rate increased to 3.9% , still far from the pre-pandemic rate.

The KCCI said the gap in wage increases between large and small companies will become more severe as large conglomerates and tech companies have dramatically raised wages in a bid to secure and retain talent.

This has recently sparked government concern, with Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho publicly calling on conglomerates to refrain from excessive wage hikes, as it may “ cause a vicious circle of inflation.

Meanwhile, the report also cited conglomerates’ seniority-based pay system as the reason for the country’s slow improvement in closing the generational pay gap.

Known locally as “hobongje,” the hierarchical pay system that gives employees pay rises each year regardless of their productivity is more likely to be found in larger companies with unions.

The report indicates that 60.1% of conglomerates have adopted such a system, against only 13.6% of SMEs.

“Companies should consider revising the current compensation system toward performance-based compensation to reduce the negative impact on the labor market, unemployment issues and more,” the report says.

In recent years there have been growing calls to move away from a senior-based pay system that hampers diversity in the country’s labor market, but no clear progress has been made, mainly due to opposition unions.

By Kim Da-sol (


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