Big Businesses' Labor Costs Soar Despite Tepid Hiring
15 June, 2019
The labor costs of Korea's top 1,000 listed companies surged dramatically last year even though they hired only marginally more people than the year before.
Labor costs increased four times faster than staff numbers, raising fears that businesses could move abroad to slash expenses.
A firm of business analysts here said Thursday that Korea's top 1,000 listed companies hired 1.33 million people as of the end of last year, up 1.6 percent from a year earlier. But labor costs rose from W88.62 trillion to W94.26 trillion, a 6.4-percent increase (US$1=W1,184).
The increase of W5.65 trillion would have been equivalent to hiring 112,000 people who earn W50 million per year. But only 21,000 people were hired, which suggests that they used the money to pay salaries to existing staff rather than creating new jobs.
Analyst Oh Il-sun said, "It's positive if profitable companies give more rewards to existing staff, but in macro terms the effect is minimal as having more people in employment is better. A sharp increase in labor costs can lead to loss of competitiveness of and could force an exodus of companies to countries with lower labor costs."
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