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South Korea has third-highest proportion of low-paid workers: OECD

By Kim Bo-gyung
Published : March 18, 2018 - 15:38
South Korea has the third-highest proportion of low-paid workers among member countries of the Organization for Economic Cooperation and Development, highlighting the need for the country to bolster its social safety net and focus on inclusive growth.

The proportion of low-paid workers in Korea was 23.7 percent in 2017, the third-highest out of 26 OECD countries surveyed, following the US with 25.02 percent and Ireland with 24 percent, according to the organization’s report titled “Towards better social and employment security in Korea.”

The report defined low-paid as workers receiving less than two-thirds of the median wage.

The OECD’s average proportion of low-paid workers was 16.63 percent, the report said.


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“South Korea’s social protection institutions now provide income and employment support to millions of households in need. But many workers still struggle with jobs of poor quality and low social protection, because policies and rules are often poorly enforced,” the OECD said in a statement.

“Labor regulations and agreements are also geared towards protecting permanent jobs but often fail to help people in less regular jobs.”

As its first steps to address the growing income gap alongside widening employment inequality between small and midsize firms and large companies, the Moon administration increased the minimum wage by 13 percent on-year to 7,530 won ($7.05) per hour this year.

This is twice the average 6 to 8 percent annual increase implemented between 2009 and 2017, according to the presidential Minimum Wage Commission.

South Korea also had the third-highest income inequality between workers in the top 10 percent bracket and the bottom 10 percent, the OECD report said.

The decile ratios of gross earnings divides the income of the top 10 percent group by the bottom 10 percent. The bigger the ratio, the greater the inequality.

South Korean workers in the top 10 percent range earned 4.79 times more than the bottom decile, after the US, which showed a difference of 5.04 times, and Israel with 4.91 times, the report showed.

The average income decile of OECD countries was 3.41.

The report noted that Korea’s economy needs to accelerate reforms in the labor market to create quality jobs and foster inclusive growth.

Reflecting Korean workers’ preference for large companies due to higher wages, welfare and employment stability, the proportion of workers leaving a small company with less than five workers within a year totaled 50.7 percent, the report said.

This was in stark contrast to the 12 percent seen at bigger workplaces with over 300 employees. 

By Kim Bo-gyung (lisakim425@heraldcorp.com)

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