Companies Spent 5.41 Million KRW Per Worker Monthly Last Year... Gap Between Large Corporations and SMEs Narrowed by 2.2 Percentage Points

Ministry of Employment Announces '2020 Fiscal Year Business Labor Cost Survey' Results

Labor Costs for Businesses with Fewer Than 300 Employees at 70.3% of Those with 300 or More... Gap Narrows by 2.2 Percentage Points
SME Bonuses at 288,000 KRW, One-Quarter of Large Enterprises' 1,112,000 KRW

Social Insurance Premiums Surge... Health Insurance Up 5.5%, Employment Insurance Up 11.7%

[Sejong=Asia Economy Reporter Moon Chaeseok] Last year, domestic companies spent an average of 5,408,000 KRW per month to maintain the employment of one worker, according to a survey. This was influenced by the smaller increase in the minimum wage compared to previous years.

According to the "2020 Fiscal Year Enterprise Labor Cost Survey" released by the Ministry of Employment and Labor on the 16th, the average monthly labor cost per regular worker last year was 5,408,000 KRW, an increase of 1.3% (61,000 KRW) from the previous year. The survey targeted about 3,500 companies with 10 or more regular workers. The minimum wage increase rate last year was 2.87%, smaller than the 10.9% increase the year before, which is interpreted as having reduced the rise in labor costs. In 2019, labor costs increased by 2.8% (145,000 KRW) compared to the previous year.

Labor costs are divided into direct labor costs, which include fixed and overtime wages, bonuses, and performance pay, and indirect labor costs, which include retirement benefits, the four major social insurance premiums, housing, meals, transportation expenses, recruitment, and training costs. Last year, direct labor costs were 4,284,000 KRW, up 0.8% from the previous year. Fixed and overtime wages increased by 3.1% to 3,630,000 KRW, while bonuses and performance pay decreased by 10.6% to 654,000 KRW. This was a result of companies reducing expenditures beyond fixed allowances due to economic downturn.

Social insurance premiums increased. Last year, health insurance premiums rose by 5.5% to 153,000 KRW, and employment insurance premiums surged by 11.7% to 56,000 KRW. Retirement benefit costs increased by 3.4% to 472,000 KRW. On the other hand, training expenses decreased significantly by 27.9% to 16,000 KRW.

The wage gap between large enterprises and small and medium-sized enterprises (SMEs) slightly narrowed. Last year, the average monthly labor cost per worker in SMEs with fewer than 300 employees was 4,556,000 KRW, up 2.9% from the previous year, while for enterprises with 300 or more employees, it was 6,477,000 KRW, down 0.3%. When labor costs of enterprises with 300 or more employees are set at 100%, those of enterprises with fewer than 300 employees were 70.3%, narrowing the gap by 2.2 percentage points compared to the previous year.

Direct labor costs in SMEs with fewer than 300 employees were 74.4% of those in large enterprises, but indirect labor costs such as welfare and training expenses were only 56.6%. Bonuses and performance pay in SMEs were 288,000 KRW, just 25.9% of the 1,112,000 KRW in large enterprises. Child education subsidy costs were 6.8 times higher in large enterprises than in SMEs.

By industry, financial and insurance services had the highest labor costs at 9,827,000 KRW, followed by electricity, gas, steam, and air conditioning supply at 9,169,000 KRW, information and communication at 6,124,000 KRW, and manufacturing at 6,042,000 KRW. On the other hand, business facility management and rental services (2,962,000 KRW) and accommodation and food services (3,245,000 KRW) remained at the lowest levels.

This content was produced with the assistance of AI translation services.