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| Jobseekers review a list of programs during a job fair for mid-sized companies at COEX in southern Seoul, Tuesday. Yonhap |
By Yi Whan-woo
The wage gap between conglomerates and smaller businesses is widening, raising concerns that it will deepen wealth inequality as soaring inflation reduces real income and therefore hits low-income earners hardest.
This gap accordingly is spurring debate on whether conglomerates should refrain from raising salaries, as suggested recently by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, under the premise of taming inflation.
Choo's suggestion was highly controversial, as it was interpreted as putting the financial burden on salaried workers through a possible pay freeze, although wage raises are less responsible for price increases compared to the weight of the energy crunch, supply chain disruptions and other external economic risks.
"The wage difference by the size of the company is indeed a serious problem that should be tackled right away, although I disagree with the deputy prime minister concerning the idea of curbing salaries of conglomerate employees," said Kim Eun-jung, the deputy secretary general of People's Solidarity for Participatory Democracy, a progressive civic group.
She referred to the latest government data on wages based on company size.
Conglomerates' monthly wages averaged 6.94 million won ($5,332) in the first quarter of this year, up 13.2 percent from a year earlier.
This increase comes as the country's 500 largest companies posted record quarterly sales totaling 700 trillion won in the January-March period.
The 2022 quarterly data also marks the first double-digit increase year-on-year since the first quarter of 2018, when Samsung Electronics and other chipmakers paid out huge bonuses amid the global chip boom.
By companies, Samsung Electronics plans to increase its average annual salary for 2022 by 9 percent, while LG Electronics will do so by 8.3 percent.
The country's two main platform operators ― Kakao and Naver ― have decided to raise their average annual salaries by 15 percent and 10 percent, respectively.
On the other hand, the average monthly wages offered by small and medium-sized enterprises (SMEs) rose by only 4.9 percent year-on-year to 3.51 million won during the first three months of 2022.
Kim assessed that SMEs can't afford to pay as much to their workers, because many of them are subcontractors of conglomerates and they are concerned about raising the costs of goods supplied to their contractors despite the spiking prices of raw material worldwide.
"The wage gap can be said to be related to structural problems in the corporate community, and this is what the Yoon Suk-yeol administration should focus on (fixing), not pressing the conglomerates to freeze wages," she said.
Park Young-beom, an economics professor at Hansung University, meanwhile, said that a salary freeze by conglomerates might help lessen the wage gap to some extent and possibly curb price increases.
"I would say the deputy prime minister made a reasonable suggestion," he said. "The higher wage increase by the conglomerates is against social responsibility when the nation as a whole is struggling with inflation."
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