kbr-research-notes

Are Salary Hikes Keeping Up with Inflation… The Widening Gap of 'Perceived Wages' in 2026

In the first quarter of 2026, the monthly average nominal wage for regular workers in South Korea rose 3.4% year-on-year to KRW 4.555 million, but inflation-adjusted real wages increased by only 1.3% to KRW 3.847 million, meaning a significant portion of salary increases was absorbed by inflation. With consumer inflation rebounding to 3.1% in May 2026—up from a stable 2.1% in 2025—and the Bank of Korea raising its annual inflation forecast to 2.7%, the possibility of real wages turning negative in the second half of the year cannot be ruled out. Wage recovery speeds varied significantly by company size; in the first half of 2025, large enterprises (300 or more employees) saw a 5.7% increase compared to 2.7% for small and medium-sized enterprises (under 300 employees), with the core of this gap stemming from special allowances such as performance bonuses. Disparities widened not only by scale but also by industry and employment type, with wages in finance and insurance versus accommodation and food services differing by more than three times, while wages for temporary and daily workers actually declined. According to OECD comparisons, South Korea's real wages grew by over 2.9 cumulatively compared to early 2021, surpassing the median value, but the recovery margin itself is modest. Ultimately, the answer to whether 'salaries are keeping up with inflation' depends entirely on which company, industry, and employment type one belongs to.