The average starting salary for recent college graduates employed at South Korean companies with more than 300 employees exceeded 50 million won ($37,800) annually for the first time in 2023, according to a report. Consistent wage increases have pushed entry-level salaries for college graduates in South Korea above those in Japan across businesses of all sizes. At large corporations, starting salaries were about 60% higher than in Japan.
The Korea Enterprise Federation (KEF) released the findings on Jan. 12 in a report analyzing starting salaries for college graduates in South Korea and comparing them to those in Japan. The study was based on the 2023 survey on employment status by employment type, conducted by the Ministry of Employment and Labor, as well as Japan’s Ministry of Health, Labor and Welfare’s Basic Survey on Wage Structure.
Over the past five years (2019–2023), starting salaries for full-time college graduates in S. Korea rose annually by at least 1.7% and as much as 5.6%. The overall average increased from approximately $24,110 in 2019 to $27,860 in 2023. For companies with over 300 employees, the average jumped from $34,650 to $37,800. However, disparities based on company size were stark. At businesses with fewer than five employees, the average starting salary was $20,670, just 54.6% of what their counterparts at companies with 300 or more employees earned.
S. Korea’s high starting salaries at large corporations stood out even more in comparisons with Japan and Taiwan. Adjusted for purchasing power parity (PPP), the average starting salary for college graduates in South Korea (companies with 10 or more employees) was $45,401, about 30.5% higher than Japan’s $34,794. In companies with over 500 employees, S. Korea’s figure soared to $57,568, 57.9% higher than Japan’s $36,466 for businesses with over 1,000 employees. In Taiwan, the average starting salary for college graduates was around $11,300 annually, with even the highest-earning fields like pharmaceuticals and healthcare hovering in the $14,000 range.
The sharp rise in starting salaries at S. Korea’s large corporations has been attributed to the country’s rapid economic growth since the 1990s. As companies competed to attract top talent, they set higher wages. This trend reversed Japan’s position, where wage growth stagnated following the collapse of its economic bubble and prolonged periods of low growth. However, concerns are mounting in S. Korea about the sustainability of high labor costs, especially as major corporations face negative growth. The seniority-based pay system has continued to drive up labor expenses, placing added strain on companies and weakening their competitiveness.
The report also highlighted significant wage polarization. Using an index where the starting salary at companies with 10–99 employees equals 100, Japan’s large corporations (1,000 or more employees) scored 114.4, compared to 149.3 for South Korea’s large corporations (500 or more employees).
Ha Sang-woo, head of the KEF’s Economic Research Department, noted that S. Korea’s significant disparity stems from starting salaries at large companies being excessively high compared to Japan. “This is contributing to a deepening mismatch in the labor market and widening wage gaps between large and small businesses,” Ha said.
He emphasized that “wages disproportionate to productivity are not sustainable. High-paying corporations should curb excessive starting salary increases, and it’s urgent to reform the wage structure to make it more rational.” He added that the current seniority-based system makes it difficult to provide differentiated compensation based on job performance, calling for a shift toward performance-based pay.
