Companies boost profit but not employment

Headquarters of Samsung Electronics, a giant based in Korea.

Earnings increase fivefold 2000-2005, but workforce declines by 5%

Net profits posted by South Korean listed firms more than quadrupled over the past five years since 2000 but employment by the companies has dwindled, a report showed.

According to the report, based on The Hankyoreh’s analysis of the financial records of 597 listed firms, the firms earned a combined 47.67 trillion won (US$50 billion) in 2005, up 328.4 percent from their 11.14 trillion won earnings five years earlier.

However, the number of workers employed at those companies stood at 859,649 in 2005, down 5.8 percent from employment figures recorded in 2000, the report showed. Put another way, during the stated period, a total of 411 companies turned a profit, while 186 firms reported a loss. But among the firms, only 213 expanded employment, while 482 cut their payroll. Employment at the remaining two firms remained unchanged.

In terms of raw employment figures, Samsung Electronics Co. came in first, with a total of 80,607 last year, knocking Hyundai Motor Corp. from its top post. LG.Philips LCD Co. rose to eighth place from 38th over the past five years in terms of employment.

The employment growth rate was highest at Hansol LCD Inc., which saw its number of employees jump 5.6 times over the five-year period from 388 to 2,184, the report showed. At NCSoft and LG.Philips, employment growth rates for the period were more than 200 percent.

Experts say that the overall decline in employment at the listed firms is attributable to their efforts toward facility automation and profit-focused management. Business uncertainty and intensifying global competition are other factors that have weighed on companies’ employment expansion.

"Since the financial crisis in the late 1990s, companies have tended to cut their workforce rather than expand it," said Cheon Byung-you, head of the Korea Labor Institute. "In this way, they might increase their short-term profit but in the long run, it is feared they will lose market competitiveness if they neglect investment in human resources."