"It's Hard to Make Ends Meet on a Salary"... While Wages Rose 3%, Wage and Salary Income Tax Increased by 9%

Over the past five years, the burden on salaried workers has grown as Wage and Salary Income Tax, social insurance premiums, and essential living expenses have risen faster than wages, according to a recent analysis.

According to an analysis by The Federation of Korean Industries (FKI) on the 4th, the average monthly wage for workers increased from 3,527,000 KRW in 2020 to 4,154,000 KRW in 2025, reflecting an annual average growth rate of 3.3%.
During the same period, the combined amount of Wage and Salary Income Tax and social insurance premiums withheld from monthly wages rose from 448,000 KRW to 596,000 KRW, an annual average increase of 5.9%.
As a result, the proportion of taxes and social insurance premiums in total wages increased from 12.7% to 14.3%. The average monthly net income rose from 3,079,000 KRW in 2020 to 3,558,000 KRW in 2025, an annual average increase of just 2.9%.
By category, Wage and Salary Income Tax increased from 131,626 KRW in 2020 to 205,138 KRW in 2025, an annual average rise of 9.3%.
Social insurance premiums climbed from 316,630 KRW to 390,579 KRW, with an annual average increase of 4.3%.
Among social insurance premiums, Employment Insurance Premium saw the highest growth rate at 5.8% (from 28,219 KRW to 37,382 KRW), followed by health insurance premium at 5.1% (from 129,696 KRW to 166,312 KRW), and National Pension Contribution at 3.3% (from 158,715 KRW to 186,885 KRW).

The price of essential living expenses also increased by an average of 3.9% per year compared to 2020, contributing to a decline in real wages.
By major category, the highest increases were seen in utilities (6.1%), food and non-alcoholic beverages (4.8%), dining out (4.4%), transportation (2.9%), and housing (1.2%).
In the subcategories, 17 out of 23 items saw price increases that outpaced the wage growth rate (3.3%). Notably, other fuels and energy (10.6%), gas (7.8%), and electricity (6.8%) experienced the largest jumps.
FKI proposed 'Income Tax Bracket Indexation,' which would automatically adjust tax brackets in line with inflation, as a way to increase workers’ perceived income.
FKI explained, "Because the tax base does not adequately reflect inflation, higher tax brackets are being applied to workers, effectively increasing the tax rate."
Regarding concerns over reduced tax revenue, FKI suggested that the proportion of domestic income tax-exempt individuals (33.0%) should be lowered to levels seen in countries like Japan and Australia.
For social insurance, FKI emphasized the need to minimize premium rate increases by improving expenditure structures, such as preventing repeated unemployment benefit claims and excessive health insurance use.
On stabilizing grocery prices, FKI proposed making the Online Wholesale Market for Agricultural and Marine Products permanent through legislation, noting that this market, currently operated temporarily, allows direct transactions between producers and buyers and reduces distribution costs due to lower fees.
gaa1003@fnnews.com Ahn Ga-eul Reporter