"South Korea's Starting Salaries for Large Corporation Graduates Are 60% Higher Than Japan's"

Starting Salaries for Korean Large Corporations' College Graduates Higher Than Japan's by Amount and Per Capita GDP
Wage Gap Between Large and Small-Medium Enterprises in Korea Is Too Large

Source: Korea Employers Federation

[Asia Economy Reporter Changhwan Lee] It has been revealed that the starting salary for college graduates at large corporations in Korea is significantly higher than in Japan.

According to the report titled "Analysis of Starting Salaries for College Graduates in Korea and Comparison with Japan and Implications," released by the Korea Employers Federation on the 4th, the starting salary levels for college graduates in both countries are higher in Korea across all company sizes, and the gap widens as the company size increases.

Based on the 2019 purchasing power parity exchange rate, the starting salary for regular employees with a college degree at Korean companies with 500 or more employees was $47,808, whereas for Japanese companies with 1,000 or more employees, it was only $29,941, making Korea's salary 59.7% higher.

Under the same conditions, when comparing all companies with 10 or more employees, Korea's average was $36,743, while Japan's was $28,973, showing Korea's salary was 26.8% higher than Japan's.

The level of starting salaries for college graduates relative to per capita GDP was also higher in Korea than in Japan across all company sizes, with the gap being larger in large corporations.

For large corporations, the starting salary relative to GDP was 111.9% in Korea, compared to only 71% in Japan, resulting in a difference of 40.9 percentage points (p).

When comparing all company sizes, the starting salary relative to per capita GDP was 86.0% in Korea, which is 17.3 percentage points higher than Japan's 68.7%.

Source: Korea Employers Federation

The Gap in Starting Salaries Between Large and Small-Medium Enterprises Is Also Larger in Korea Than in Japan

The gap in starting salaries for college graduates between large corporations and small-medium enterprises (SMEs) is also significantly larger in Korea than in Japan. When the starting salary for companies with 10 to 99 employees in Korea is set at 100, companies with 500 or more employees reached 151.7, whereas in Japan it was only 113.4.

This is mainly attributed to the excessively high wage levels in Korean large corporations.

As of 2020, the average starting salary for regular employees with a college degree at Korean companies with 300 or more employees was 50.84 million KRW (total wages including overtime pay).

Even excluding overtime pay, the total wage for regular employees with a college degree at companies with 300 or more employees was 46.9 million KRW, whereas for companies with fewer than 5 employees, it was only 25.99 million KRW, which is just 55.4% of the salary at companies with 300 or more employees, indicating a very large wage gap by company size.

Ha Sangwoo, head of the Economic Research Division at the Korea Employers Federation, stated, "The gap in starting salaries between large and small-medium enterprises in Korea is much larger than in Japan, mainly due to the significantly higher starting salaries at Korean large corporations compared to Japan." He added, "This phenomenon can serve as a root cause of various social conflicts such as job mismatches and worsening wage disparities."