As international oil prices surge due to the ongoing conflict in the Middle East, inflation continues to rise, resulting in a decline in real wages for workers for the second consecutive month.
The Ministry of Employment and Labor reported on July 30 that the nominal wage for employees at businesses with at least one regular worker was 3,982,000 won in May, an increase of 1.7% (66,000 won) compared to the same month last year. This marks four consecutive months of growth since February.
However, when adjusted for inflation, the real wage fell to 3,321,000 won, a decrease of 48,000 won (-1.4%) from the same period last year. This represents a decline for two months in a row, following a 1.0% drop the previous month.
This is the first time real wages have decreased for two consecutive months since December 2023 to January 2024, when a similar decline occurred due to the effects of holiday bonuses. Excluding holiday influences, this is the first decline since July to August 2023.
The data indicates that the rate of wage growth is lagging behind inflation. Jeong Hyang-sook, head of the Labor Market Research Division at the Ministry, stated, "The consumer price inflation rate, which fluctuated around 2% last year, has been increasing since April this year. In a high inflation environment, wage growth rates are showing a downward trend."
In fact, the consumer price inflation rate reached 3.1% in May, the highest level in 26 months. The surge in international oil prices due to the Middle East conflict has driven up the prices of petroleum products, contributing to the ongoing inflationary trend.
Additionally, the decline in special bonuses has also impacted wages. In May, special bonuses averaged 263,000 won, down 5.0% (14,000 won) from the previous year. The increase in temporary and daily workers, who typically earn lower wages, has further pulled down overall wage levels. Average working hours also decreased by 7.2 hours from a year ago, totaling 139.8 hours.
Jeong explained, "The negative growth in special bonuses is due to a combination of factors, including changes in the payment method and timing of special bonuses following wage system reforms, as well as a decrease in performance bonuses. The increase in temporary and daily workers this year, following a decrease last year, has resulted in lower overall working hours and wages."
As of the end of last month, the number of businesses with at least one employee was 20,714,000, an increase of 1.2% (248,000) compared to the same period last year. While the number of regular workers increased by only 0.4% (76,000), there was a notable rise in temporary and daily workers (7.9%, 150,000) and other workers (1.6%, 22,000).
By size, the number of employees in businesses with fewer than 300 regular workers increased by 1.0% (174,000) to 17,017,000, while those in businesses with 300 or more workers rose by 2.0% (74,000) to 3,697,000.
By industry, sectors such as health and social welfare services (4.8%, 124,000), finance and insurance (3.8%, 33,000), and public administration, defense, and social security administration (3.4%, 33,000) showed growth. The manufacturing sector, which employs the largest share of the workforce, also saw an increase of about 12,000 workers.
Conversely, the wholesale and retail sector (-1.3%, 29,000), arts, sports, and leisure services (-1.6%, 5,000), and information and communication sector (-0.4%, 3,000) experienced declines in employment.
* This article has been translated by AI.
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