[Desk Column] The Era of 2 Million Won Soldier Salaries and Small to Medium Enterprises

Kim Min-jin, Head of the Ministry of SMEs and Startups

Both ruling and opposition candidates have pledged to raise soldiers' monthly pay to 2 million won. One candidate promises to do so within their term, while the other vows to implement it immediately upon election. Besides those concerned about the national budget, there is another group whose hearts are breaking over this pledge: small and medium-sized enterprise (SME) owners. Their concerns are as follows.

"There are quite a few SMEs that can only afford to pay wages slightly above the minimum wage. If soldiers' pay suddenly jumps to the minimum wage level, SMEs will suffer significant damage not only in the labor market but also in their image. Will young people who have completed their military service want to come work in SME workplaces?"

While it would be ideal to pay higher wages, the reality is that there are more jobs that cannot offer such pay. Statistics confirm this. According to the recent '2020 Wage Worker Job Income (Compensation) Results' released by Statistics Korea, the average monthly salary for office workers, including those in large corporations, is 3.2 million won. The average for SMEs is 2.59 million won. If soldiers' pay reaches 2 million won, after deducting taxes, health insurance, national pension, and other expenses from SME wages, the pay for conscripted soldiers will be roughly comparable.

Raising soldiers' pay has been a recurring campaign promise during every election. Since there are hundreds of thousands of soldiers and young people about to enlist, and considering their parents as well, it is a valuable voter base that politicians cannot ignore.

So far, presidential candidates have largely kept their promises regarding soldiers' pay increases. As a result, the pay for a sergeant, which was 108,000 won in 2012, rose to 216,000 won in 2017, and this year it is 676,000 won. This is a 6.26-fold increase over ten years.

In 2012, soldiers' pay for a sergeant was only 15% of the minimum wage at the time. Therefore, a steep increase for a while was somewhat inevitable. In the past, young soldiers served for "patriotic pay" (low pay justified by patriotism). While serving, soldiers supplemented their insufficient pay with money sent by their parents to buy essential daily items within the military.

In August 2020, the Ministry of National Defense announced in its 2021?2025 Defense Mid-term Plan that it would raise sergeants' pay to 962,900 won by 2025. This plan represented a 78% increase over five years compared to 2020 (540,900 won). If achieved, soldiers' pay for sergeants would reach about 35% of the minimum wage this year and around 45% by 2025 (assuming average minimum wage increases). Since the Roh Moo-hyun administration, soldiers' pay has steadily increased at a double-digit rate, except during the Lee Myung-bak administration, gradually becoming more realistic.

Candidate Lee Jae-myung pledged on Facebook to raise soldiers' pay to 2 million won by 2027, while candidate Yoon Seok-youl promised to implement the 2 million won pay immediately upon election. One promises a threefold increase within five years, the other an immediate threefold increase.

It is not fair to dismiss both candidates' pledges as mere populism. Nor do we intend to force soldiers to accept "patriotic pay" under the pretexts of budget constraints or populism. Appropriate compensation and treatment at the national level are necessary for fulfilling military service obligations.

The values of generations have also changed. "Fairness" is an especially sensitive topic for today's 20-somethings and Generation Z.

However, we must ask how responsibly and comprehensively the two candidates have considered this issue. In recent years, we have witnessed the side effects and social conflicts caused by rapid minimum wage hikes. There are many problems in the world that cannot be solved by simply crunching numbers.

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