Wage gap for workers at large and small companies keeps getting bigger

Changes in average wages at large corporations and SMEs

Statistical analysis also shows large differences in pension enrollment and other benefits among workers in different classes 

The 2014 wage gap between large corporations and SMEs was greater than ten years earlier, a study shows.

Significant gaps were also found in other working conditions, including social insurance enrollment.

Kim Bok-sun, a senior researcher at the Korea Labor Institute, released a report on Feb. 22 titled “Comparison of Wages and Working Conditions by Workplace Size,” analyzing differences in wages by company scale and employment type over the past decade using figures from Statistics Korea‘s supplementary census on the economically active population.

The report showed average 2014 monthly wages for employees at SMEs (workplaces with fewer than 300 employees) to be 56.7% of the earnings for employees at large corporations (300 or more employees). In other words, an SME employee earned $56.70 for every $100 earned by a large business employee.

Wage discrepancies between large corporations and SMEs rapidly increased in the mid and late ’00s and have become entrenched since 2010. In 2004, SME wages were 59.8% those at large corporations; six years later in 2010, they had dropped sharply to 56.7%. After a brief rebound to 57.5% in 2011, they began sliding again, with a 2014 average falling short of 2011 levels.

One especially striking finding was that regular employees at SMEs earn less in wages than irregular employees at large corporations. When ordered by hourly wage, regular workers at large corporations earned the most in 2014, at 21,568 won (US$19.46) per hour. They were followed by irregular workers at large businesses (14,257 won/US$12.86), regular workers at SMEs (12,828 won/US$11.57), and irregular workers at SMEs (8,779 won/US$7.92). This translates into $66.10 earned by irregular workers at large corporations, $59.40 by regular SME workers, and $40.70 by irregular SME workers for every $100 earned in wages by a regular worker at a large company.

Other discrepancies by workplace size and employment type were found for working conditions such as national pension and health insurance enrollment and paid leave availability. Employees at large corporations had a 95.6% national pension enrollment rate in 2014, as well as health and employment insurance enrollment rates over 95%. For SME employees, national pension enrollment was just 64.1%, with social insurance enrollment rates below 70%. The numbers mean that three to four out of every ten SME employees are being left out of social insurance protections.

Other figures showed 93.4% of large corporation employees enjoying paid leave, compared to only 44.4% of SME employees.

Working conditions for irregular SME employees were especially bad, with a 2014 national pension enrollment rate of just 35.9% and health and employment insurance enrollment of 42.5% and 41.7%, respectively. Less than 30% benefited from paid leave, while the labor organization rate was just 2.4%.

“The fact that the wage gap by company size has grown from ten years ago means that the recent increase in employment at SMEs is not entirely a welcome phenomenon,” Kim wrote in the report.

“Alongside support for SMEs, policy efforts also need to be made to address wage inequality by workplace size,” Kim advised.

　

By Kim Kyung-rok, staff reporter

　

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