"Salary Gap Over 4 Million Won"... Wage Difference Between Large and Small Companies Widens with Age

Gap widens by age but narrows from late 50s
64% of young job seekers still "prefer large companies"

The income gap between workers in large corporations and small and medium-sized enterprises (SMEs) was found to widen up to 2.5 times in the early 50s age group.

According to the job administrative statistics data from the National Statistical Portal (KOSIS) on the 11th, the average pre-tax monthly income of workers in large corporations was 5.63 million KRW in 2021. This is about 2.1 times higher than that of SME workers, who earned 2.66 million KRW.

Looking at the income gap by age, the difference between large corporation and SME workers was 1.4 times in the early 20s (ages 20-24), 1.6 times in the late 20s (ages 25-29), 1.8 times in the early 30s, 2 times in the late 30s, 2.2 times in the early 40s, and 2.3 times in the late 40s.

The income gap, which tended to widen gradually with age, peaked at 2.5 times in the early 50s. After that, it slightly decreased to 2.4 times in the late 50s and 1.9 times in both the early 60s and those aged 65 and older.

Specifically, the average monthly salary of large corporation workers in their early 30s was 4.76 million KRW, while SME workers in the same age group earned an average of 2.67 million KRW, showing a difference of 2.09 million KRW. Particularly, for workers in their early 50s, large corporations paid 7.6 million KRW, whereas SMEs paid 2.99 million KRW, a gap of 4.61 million KRW.

[Image source=Yonhap News]

However, among the total 25.58 million jobs, large corporations accounted for only 4.24 million jobs, or 16.6%. SMEs held the largest share with 15.88 million jobs, representing 62.1%, followed by non-profit organizations at 21.3% (5.46 million jobs).

In terms of job growth compared to the previous year, SMEs added 490,000 jobs, non-profit organizations added 190,000 jobs, but large corporations only added 170,000 jobs.

In 2021, the total number of wage and non-wage workers identified through administrative data such as the four major social insurances was 25.49 million, an increase of 658,000 from the previous year.

Regarding job mobility, only 409,000 people, or 2.6%, moved from SMEs in 2020 to large corporations in 2021.

Excluding cases where the SME they worked for grew into a large corporation, this figure drops to 2%. In other words, there are not many cases of the so-called ‘job ladder’ where workers gain experience in SMEs and then move to large corporations.

The remaining 66% (10.25 million) stayed at the same company, 15.1% (2.348 million) moved to other SMEs, and 1.2% (186,000) transferred to non-profit organizations. Those who became unregistered numbered 2.332 million (15%).

Meanwhile, according to a survey conducted last month by the Korea Chamber of Commerce and Industry targeting 300 young job seekers, the preferred workplaces (multiple responses allowed) were large corporations (64.3%), public sector (44.0%), and mid-sized companies (36.0%) in that order. Only 15.7% expressed a preference for SMEs.

Regarding SMEs, the majority held negative perceptions such as low compensation relative to workload (63.3%), difficulty achieving work-life balance (45.3%), uncertain future growth (43.7%), low employment stability (39.3%), and low social recognition (37%).