Wage Gap Between Large Corporations and SMEs Delays Youth Employment, Study Finds

An analysis has revealed that the monthly average wage gap between large corporations and small and medium-sized enterprises (SMEs) is a primary reason for delaying young people's employment. According to a report released by the Korea Institute for Industrial Economics and Trade (KIET), this disparity causes young people to hesitate entering the labor market early.

The report analyzed the employment status of regular wage earners aged 15 to 64. As of 2024, the average monthly wage for SMEs stood at 3.51 million won, about half of that for large corporations (7.16 million won). Although the SME wage ratio improved slightly from 0.43 times the large corporation wage in 2015 to 0.49 times, the actual wage difference widened from 2.98 million won to 3.65 million won.

The widening wage gap, coupled with the increasing difficulty of switching jobs from SMEs to large corporations, was found to delay labor market entry by approximately 3.6 months for four-year university graduates. While SMEs had more than double the proportion of job mobility compared to large corporations, most of this movement was between different SMEs. Among individuals in their 20s, only about 5-6% transitioned from SMEs to large corporations.

Min Soon-hong, a research fellow at KIET, interpreted this as young people striving to enter better jobs by extending their job preparation period. Min emphasized the need to implement policies aimed at improving the actual working conditions for young people joining SMEs.