Top 4 conglomerates contribute significantly to job market, economy

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Four major South Korean conglomerates, including the Samsung, SK, Hyundai Motor, and LG groups, have made significant contributions to the domestic job market. According to the Korea Institute for Firm Contribution, the total number of employees in the four companies increased to 696,000 in 2022 from 532,000 in 2013, marking an increase of 164,000 or 30.8 percent.

The most significant contributor was Samsung Group, which hired 253,000 employees in 2022, an increase of about 10,000 compared to 2021 and a substantial rise of 39,000, or 18 percent, compared to 2013’s 214,000 figure.

But SK Group had the highest employment growth rate, with the company’s overall employment increasing to 122,000 last year from 590,000 a decade ago and more than doubling its size. The expansion was attributed to SK Group’s continuous growth through acquisitions and entry into new business sectors. Hyundai Motor Group and LG Group both saw their employment numbers increase by 30,000 over the past decade, with growth rates in the 20 percent range.

The salary growth rate also significantly surpassed the employment growth rate. Total salaries for the four major groups increased to 77 trillion won ($57.7 billion) last year from 37.6 trillion won ten years ago, or an increase of 104.7 percent. Considering the increase in new hires, the per capita salary level rose by 56.53 percent compared to ten years ago. Samsung Group’s total salaries increased to 31.1 trillion won from 14.7 trillion won in the last ten years, recording a growth rate of 111 percent. SK Group’s total salaries increased to 13.1 trillion won from 3.9 trillion won.

The surge in salary levels is likely attributable to a significant increase in the average wages of engineers, driven by the recent boom in the semiconductor industry. Additionally, competition among large corporations to acquire talent also contributed to this increase. The wage growth rate in large corporations has outpaced the inflation rate over the past ten years, which is approximately 14 percent.

“While multiple factors are at play, there is concern that labor costs may become excessively high compared to other countries like Japan, given the continued rigidity in labor,” said one unnamed industry insider.

The four conglomerates also made substantial contributions to the Korean economy by paying a combined 77 trillion won ($57.7 billion) in wages to 696,000 employees last year, a report showed Wednesday.

When considering the corporate tax contribution, the four conglomerates accounted for more than 20 percent of the entire government revenue, which amounted to 103.6 trillion won last year. According to an analysis by the Korea Institute for Firm Contribution, Samsung Group (165 points), Hyundai Motor Group (81 points), SK Group (78 points), LG Group (66 points), and Lotte Group (27 points) Group ranked first through fifth among the top 20 conglomerates in terms of contribution to the Korean economy.

The report, based on financial statements from 2022, evaluated contributions of the largest companies across eight categories, including value creation, foreign currency acquisition, household income, national finance, employment, research and development, facility investment, and social contributions.

For the country’s ten major industry sectors, the total employment increased from 973,000 people in 2021 to 10.32 million in the past year.

The remuneration paid to these employees amounted to 102.6 trillion won, up by 13 trillion won compared to a year ago.

The contributions of the top four conglomerates to national finances amounted to 23 trillion won, with Samsung Group contributing 10 trillion won, SK Group 6.3 trillion won, Hyundai Motor Group 3.8 trillion won, and LG Group 2.1 trillion won.