The average starting salary for university graduates at major South Korean companies with over 300 employees topped 50 million won ($33,903) for the first time.

The Korea Enterprises Federation (KEF) on Sunday released a report based on the Ministry of Employment and Labor’s employment survey data that analyzed starting salaries for university graduates in Korea and comparing them with Japan.

According to the report, the average starting salary for university graduates at companies with 300 or more employees in 2023 was 50.01 million won, up from 45.71 million won in 2019, 48.71 million won in 2021, and 49.85 million won in 2022.

“The introduction of tenure-based wage systems elevated overall wage levels at large corporations, resulting in higher starting salaries for career starters with university degrees,” the KEF explained, adding that companies are somewhat aggressively raising starting salaries “to attract top talent and mitigate labor risks.”

The wage gap between companies of different sizes has also widened. The average starting salary at companies with 30 to 299 employees was 35.95 million won, or 71.9 percent of the figure for companies with 300 or more employees in 2023. Smaller firms with 5 to 29 employees offered 30.7 million won, while those with fewer than 5 employees provided 27.31 million won - which is equivalent to 61.4 percent and 54.6 percent respectively, of the salaries at larger firms.

The business community has raised concerns that the growing disparity in starting salaries between large corporations and small- and medium-sized enterprises (SMEs) could exacerbate job mismatches between young job seekers and companies. They warn this trend risks creating a vicious cycle of widening wage inequality.

”Excessive increases in starting salaries at large corporations could lead to adverse effects across the labor market, such as an avoidance of SMEs and greater job mismatches,” the KEF said.

The report also highlighted that Korean starting salaries for university graduates are higher than those in Japan. Adjusted for purchasing power parity (PPP), the average starting salary at companies with 10 or more employees in Korea was $45,401, 30.5 percent higher than Japan’s $34,794.

For larger corporations, the starting salary at firms with 500 or more employees in Korea was $57,568, 57.9 percent higher than Japan’s $36,466 for companies with 1,000 or more employees.

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