[Economic Daily] As the Chuseok holiday approaches, many South Korean workers are expressing dissatisfaction. Economic uncertainty has led to reduced bonuses and increased tax burdens, dampening holiday spirits.
According to a survey by the Korea Employers Federation of 625 companies with five or more employees, only 60.4% plan to give Chuseok bonuses this year, down from 64.8% last year. This means 40% of companies are not offering bonuses at all.
Larger companies with over 300 employees are more likely to give bonuses (68.1%) compared to smaller ones (59.4%), but both figures have declined from last year. Most companies (89.3%) reported giving bonuses similar to last year, while only 7.6% increased them.
Amid economic slowdown, companies are cutting costs by reducing bonuses and offering more time off instead. The survey showed 20.1% of companies plan to give employees more than 10 days off.
Even those receiving bonuses face disappointment as taxes reduce their take-home pay. For example, a 1 million won bonus is reduced to about 600,000 won after income tax and social insurance deductions.
The income tax structure can cause a 'bonus paradox,' where a slight increase in taxable income raises the tax rate from 15% to 24%. To avoid taxes, some companies give gift certificates or gift sets, but these can also be taxed if considered income. While gifts are tax-free as welfare expenses, gift certificates are treated as cash compensation and taxed accordingly.
Meanwhile, lawmakers continue to receive substantial holiday bonuses. This year, lawmakers received 4,247,940 won, based on public servant regulations, which is seven times the average worker's Chuseok bonus of 628,000 won, according to job platform Saramin. One lawmaker donated their bonus, criticizing the disconnect from public sentiment.
* This article, published by Aju Business Daily, was translated by AI and edited by AJP.
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