A shopper browses watermelons at a hypermarket in Seoul on Thursday. The wholesale price of an 8-kilogram watermelon stood at 20,569 won on Wednesday, up 14.2% from the previous month and 33% from a year earlier. [Yonhap]
A shopper browses watermelons at a hypermarket in Seoul on Thursday. The wholesale price of an 8-kilogram watermelon stood at 20,569 won on Wednesday, up 14.2% from the previous month and 33% from a year earlier. [Yonhap]

"I went to the store to buy a watermelon for my kids during summer break, but I walked out empty-handed after seeing the price." Oh, a 46-year-old homemaker living in Sejong, went to a supermarket on Saturday to buy a watermelon for her two sons — only to find the price had jumped from the usual 17,000 won to 25,000 won ($17). "If you shop without thinking, it's easy to spend over 100,000 won," she said. "Pork prices have been high for a long time now, and chicken is expensive too. Even cucumbers aren't what they used to be." She added: "It really seems like the saying is true — everything goes up except your paycheck."

Signs are growing that workers' wages will continue to lag behind inflation for an extended period.

Real wages fell for two consecutive months through May, and with June consumer price inflation accelerating to 3.2%, analysts say June real wages are also likely to come in negative. If nominal wages in June did not rise by at least 3.2%, real wages will have declined for three straight months.

Nominal wage growth has slowed to its weakest pace since the COVID-19 pandemic, leading observers to say the erosion of workers' real purchasing power could persist for some time.

Wages failing to keep up with prices — will real wages fall again in June?

The Ministry of Employment and Labor released its June 2026 business labor force survey on Saturday, showing nominal wages per worker at establishments with one or more full-time employees reached 3.98 million won in May, up 1.7% from a year earlier. Real wages, which account for price levels, fell 1.4% over the same period.

In other words, while the number on workers' pay stubs grew, the amount of goods and services that money could actually buy shrank.

Real wages had also declined year-on-year in April, marking two consecutive months of contraction.

The Ministry of Employment and Labor noted that, stripping out the effect of shifting bonus payment months around public holidays, real wages have not fallen for two straight months since July–August 2023.

The immediate cause of the decline is prices rising faster than wages.

Nominal wages grew just 1.7% in May, while the consumer price index rose 3.1% year-on-year. At establishments with fewer than 300 workers, wages per employee came to 3.63 million won, up 1.6% from a year earlier. At establishments with 300 or more workers, wages reached 5.6 million won, a 1.0% increase. Neither figure kept pace with the 3.1% consumer price inflation recorded that month.

Price pressures intensified further in June. According to the Ministry of Statistics, the consumer price index rose 3.2% year-on-year in June, up 0.1 percentage point from May's 3.1% gain. The everyday price index — which tracks items households buy frequently — climbed 3.4%, outpacing the headline inflation rate. That suggests the cost burden felt by consumers may be even greater than the official figures indicate.

For June real wages to avoid a decline, nominal wages in the same month would need to have risen by at least 3.2%. Given recent wage trends, however, analysts say the odds favor a continued decline in real wages through June.

The 1.7% nominal wage growth recorded in May was the lowest for that month since May 2020, during the height of the COVID-19 pandemic. Unless June wage growth rebounds sharply from the previous month, real wages could fall for three consecutive months, following declines in both April and May.

More temporary workers, fewer bonuses — a drag on consumption recovery

The slowdown in nominal wage growth was partly driven by a decline in special payments such as bonuses and performance pay. In May, regular and overtime pay for full-time workers rose from a year earlier, but special payments fell. Shifts in the timing and scale of corporate bonus disbursements are seen as the main drag on overall wage growth.

A sharp increase in temporary and daily workers — who tend to earn less — has also been cited as a factor pulling down the average wage growth rate across all workers.

As of the end of June, the number of full-time workers stood at about 17.289 million, up 76,000 from a year earlier — a gain of just 0.4%. By contrast, temporary and daily workers numbered about 2.047 million, an increase of 150,000, or 7.9%, over the same period — far outpacing full-time worker growth. When the share of lower-paid temporary and daily workers expands, average wage growth across all workers can slow even if individual workers are earning more.

"When the number of temporary and daily workers increases, their larger share of the total workforce creates a composition effect that lowers the average wage growth rate," a Ministry of Employment and Labor official said. "That said, the wages and working hours of temporary and daily workers themselves did increase."

Wage gaps across industries remained wide. Workers in finance and insurance earned an average of 6.97 million won per month — the highest of any sector — followed by those in electricity, gas, steam and air conditioning supply at 6.04 million won. Workers in accommodation and food services earned the least, at 2.39 million won, though their year-on-year wage growth was relatively strong, boosted by rising inbound tourism and longer working hours among temporary and daily workers.

A prolonged decline in real wages could also weigh on private consumption, which has recently shown signs of recovery. When the cost of food, utilities and dining out rises faster than household income, disposable income and spending capacity shrink. Lower-income households, which spend a larger share of their income on necessities, are particularly vulnerable to rising prices.

Attention is now turning to the July consumer price trends report that the Ministry of Statistics is set to release Wednesday.

If consumer price inflation remains elevated at around 3% in July, workers' real purchasing power will be slow to recover even if wages rise somewhat. Should nominal wage growth remain subdued while price pressures persist, the sense of economic hardship felt by households could linger for a considerable period.


fact0514@heraldcorp.com