Sharply Widened Wage Differential by Education Level Since Money Crisis

Wage differential by education level have widened sharply since 1998 just after the money crisis. According to “99` report on basic statistics of wage structure” made public by the Ministry of Lobor on 8th, the wage level of college graduates was average 51.7 percent higher than those with only high school diplomas.

Average wage of college graduates was twofold of that of high school graduates in 1980s, but the gap narrowed to 45.5 percent in 1997. But wage differentials grew larger to 49 percent in 1998 just after the money crisis, and the differentials went beyond 50 percent in 1999. It is the first time since 1993 that wage differentials passed over 50 percent.

In particular, high school graduates had maintained a higher level of wage than overall average wages. But high school graduates actually became ‘low wager workers’ since 1983 as the number of college graduates have increased, and wage level of high school graduates became 10.4 percent lower than overall average wage in 1998.

Among college graduates, workers employed over 10 years received wages 101.1 percent higher than their initial salaries. High school graduates and middle school graduates employed for the same period, however, received 84.8 percent higher and 60.2 percent higher, respectively, than their initial salaries.

By occupation, wage differentials by education level were the largest, 84.9 percent, in a real estate agent and service industry. Public health and social service, and educational service, etc. followed. Wage differentials by education level were relatively small in agriculture, fishery, and in the mining industry.

An official of Ministry of Labor expressed worries, saying “as temporary workers have increased since the money crisis, ‘wage stratification’ by education level and gender, etc, is becoming more evident. If education level has excessive impact on wage level, it will instigate overall education inflation, which will result in the decrease of productivity.

Kim Joon-Seok kjs359@donga.com