Why Do Koreans Earn More Than Mongolians?

We are constantly beset by competition throughout our lives. In particular, students in Korea are pushed into private education from an early age and made to run a breathless race. Getting into a good university and a good company is seen as the way to be rewarded, at least to some extent, for all that hardship.

A Dutch student who studies only halfheartedly and has mediocre English skills can receive a record-high salary the moment they are hired. In Singapore as well, people start out with annual salaries in the hundreds of millions of won. The annual salary of a new employee in the United States exceeds 200 million won, and at some IT companies it even surpasses 400 million won. What is even more frustrating is that while we have to work 40 hours a week, workers in the United States, the Netherlands, and Singapore seem to work only half as much as we do.

On the other hand, even if a young person in Mongolia graduates from the country’s top university and joins its very best company, the salary amounts to only about 500,000 won a month in Korean currency. From the perspective of a young Mongolian, a young Korean beginning working life while earning 5 to 10 times more would seem enviable.

What is the standard for a “good university and a good company,” and why do such differences arise? The key lies in capital accumulation, that is, productivity. When capital accumulates, productivity rises, and accordingly people can be rewarded more generously. What, then, becomes capitalized? Over a long period of time, organizational culture, ecosystem culture, and community culture are formed and built up. In other words, everything a company has refined and developed—know-how, technology, experience, networks, and more—constitutes capital.

Singapore, the Netherlands, and the United States, mentioned earlier, are all countries with higher per capita national income than Korea. The United States and the Netherlands industrialized far earlier than Korea and accumulated vast amounts of know-how, while money and talent are flocking to Singapore as it rises as a hub of Asia.

Rather than simply comparing annual salaries, look for companies that possess new technology and knowledge capital, and businesses that are likely to keep rising in the future. Unless there is some special problem, companies with technological strength and underlying capacity are highly likely to continue developing. We need to cultivate the ability to discern knowledge communities and creative communities that are evolving in ways favorable to capital accumulation.

Getting into a company with a long-standing tradition and unrivaled technology is not the end of the story. There still awaits the important task of continuing to develop yourself there.

No matter how good a company may be, if you keep doing only routine work, there is no way you will grow personally. The larger the company, the more specialized and divided the work tends to be, which creates the risk of stagnating in one place. But that does not mean it is wise to leave a company with strong growth potential too easily. While enduring routine work for a year or two, you should seek out new paths within the company. If you are patient and build your capabilities, you may be able to move into a position better suited to your aptitude within the company, or move to another company. These days many firms prefer experienced workers, so even if it is difficult, if you endure and build your experience, you can certainly find a good company.

A company with accumulated capital is bound to keep rising over the long term. That is because the stock of knowledge and assets it has built up continues to create added value. If you work at a company where capital has accumulated and build your own capabilities, you too can rise at the same time. If you understand the principle of rising together and move strategically, before long you will have become a competitive and capable talent.

Once you come to understand the principle of capital accumulation, complaints such as, “You and I are the same, so why do you earn less money? We graduated from the same university, so why is there a difference?” or “I worked harder than anyone else, so why do I earn less than a Dutch office worker?” will naturally fade. Young Mongolians, too, will come to understand why their annual salaries are far lower than those of young Koreans.

To have been born in the Republic of Korea rather than Mongolia is extraordinary good fortune. Korea is a country with an immense stock of capital that Mongolia cannot compare with. If you sharpen and cultivate yourself on this firm and fertile ground, before long you will have become the ultimate secret weapon.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: 한국인은 왜 몽골인보다 월급을 더 많이 받을까?

Author: Sung-no Choi

Date: 2023-07-21

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=4&idx=25900