High Prices Shrink Paychecks: A Monthly Salary of 4.03 Million Won Feels Like 3.37 Million

Workers in South Korea earned more on paper in the second quarter, but rising prices reduced what that income could buy. Average monthly nominal pay reached 4.036 million won, while real pay fell to 3.37 million won.

The figures came from the Ministry of Employment and Labor’s July labor force survey. Among businesses with at least one regular employee, average monthly nominal wages rose by 83,000 won, or 2.1%, from a year earlier during the April-to-June quarter.

Consumer prices climbed 3.0% over the same period. After adjusting for inflation, real wages dropped by 28,000 won, or 0.8%. Real wages have fallen every month since April, marking the first decline lasting at least three months since the five-month streak from April through August 2023.

Real wages measure the purchasing power of pay after removing the effect of price changes. In practical terms, a larger amount deposited into a worker’s account does not necessarily mean greater purchasing power when prices rise faster than wages.

Jeong Hyang-sook of the ministry’s Labor Market Research Division described the conditions as a “three-high” situation involving elevated exchange rates, oil prices and inflation. She said the inflation rate had reached its highest level since 2022, while wage growth lagged behind it.

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Exchange rates, oil prices and prices are all high in this ‘three-high’ situation, with inflation at its highest level since 2022.