An analysis found that the wider the wage gap between large corporations and small and midsize enterprises, the later young people enter the labor market.
Korea Institute for Industrial Economics & Trade (KIET) said on the 28th in its report "Dual structure of the labor market and youth employment" that a full analysis of jobs for regular wage workers ages 15 to 64 with income, using the Employment Activity Statistics Register, showed these results. In 2024, the average monthly wage at small and midsize enterprises was 3.51 million won, about half that of large corporations (7.16 million won).
The SME-to-large-corporation wage ratio improved somewhat from 0.43 in 2015 to 0.49 in 2024, but the nominal gap widened from 2.89 million won to 3.65 million won over the same period. Citing the performance bonus disputes at Samsung Electronics and SK hynix, the report said the importance of getting into a large corporation is growing in a structure where large-corporation performance does not trickle down to small and midsize enterprises.
The gap widens quickly with age. In their 20s, SME wages are about 60% of those at large corporations, but in their 50s they fall to 43%. A simple sum of the average wage gaps by age from 25 to 49 suggests a lifetime wage income difference of about 1 billion won.
It is also getting harder to move from small and midsize enterprises to large corporations. The share of job moves among SME incumbents was more than twice that of large corporations, but most moved to other SMEs, and even among people in their 20s, who are the most mobile, only 5% to 6% moved to large corporations.
As the gap widens and pathways for switching jobs narrow, young people are delaying their entry point, the report said. In empirical analysis using a youth panel, reflecting the current level of the gap, it was estimated that graduates of four-year colleges delay graduation by about one month and labor market entry by about 3.6 months.
The report said, "To encourage youth employment at small and midsize enterprises and long-term tenure, policy improvements are needed to raise real wages by expanding direct support targeting young people rather than corporations." It also said, "As in cases such as the end of the Youth Tomorrow Filling Deduction and the halt to new subscriptions to the Youth Leap Account, the continuity of support programs must be secured to prevent confusion for young people and companies and to allow long-term planning."