Beating Wage Gap Between Regular and Irregular Workers To Cost 20 Trillion

It is estimated that if the wages of nominal irregular workers are improved to as much as 85 percent of wages of regular workers to get rid of the present gap between the two, the cost that companies would have to bear would be over 20 trillion won.

This modification would also jeopardize both regular and irregular workers by causing a chill to corporation investment and a downsizing of the job market, experts analyzed. Nominal irregular workers are the ones who do the same job regular workers do, but who are paid less.

On April 5, researcher Pak Jong-kyu at the Korea Institute of Finance said in a research paper comparing salary between regular and irregular workers that “to increase the nominal irregular workers’ wages to the level of 85 percent of regular workers’, which now is at around 54 percent, 20 trillion 598.6 billion won is expected to be the additional cost by 2003 standards.” He claimed, “It is fully understandable about the necessity of salary increase for the irregular workers, but the burdens companies would take also should be considered.” This analysis seems to point out the problems over the issue of a group of labor organizations that are insisting for a wage increase for nominal irregular workers.

“20 trillion and 590 billion is more than the annual net profit, 18 trillion 260.9 billion won, of 531 listed companies reported last December,” he forecasted. “Considering the trend that the salary gap between regular workers and nominal irregular workers is getting larger, and the proportion of the latter is getting higher, the cost for beating the wage gap may be getting excessive.”

The cost that will be required for targeting the gap between nominal irregular and regular workers was calculated based on the Korea National Statistical Office’s 2001 sources; nominal irregular workers took up 26.7 percent of the total labor force with a total of 353,900, and their monthly payments were 915,000 won, 54 percent of the regular workers’ salary of 1,694,000 won.

By the standard of 2001, to level up irregular workers’ wages to 85 percent of regular workers’, the cost of 16 trillion 880.7 billion was estimated. Adding to that, a wage increase of 11.54 percent and 9.40 percent individually from 2002 and 2003 was reflected.

“The cause of beating the wage gap between two groups is rightful, but it is difficult to transform the labor market altogether following a certain policy guidelines since the structure of labor market is too deformed,” he said, suggesting that efforts should be made to “make the labor market flexible enough to make entering and exiting the regular labor market possible at any time.”

Chang-Won Kim changkim@donga.com