Samsung Electronics' Welfare Expenses Four Times the Average of Top 10 Companies... Generous 'Tax-Exempt' Benefits

Samsung Electronics Employees with Annual Salaries Over 100 Million KRW
Income Tax Rate Savings of Approximately 18~52%
Followed by GS Caltex and LG Electronics in Order

Samsung Electronics spends more than four times the welfare expenses per employee compared to the other top 10 companies. Welfare expenses refer to money spent on employee benefits such as children's tuition fees, medical expenses, transportation costs, and welfare facilities. Unlike salaries, these expenses are not subject to taxes. When welfare expenses are provided to employees through an in-house labor welfare fund for tuition support, they are tax-exempt. Welfare expenses used to boost employee morale, such as event costs, also do not require income tax payment.

Samsung Electronics Vice Chairman Lee Jae-yong visiting Samsung SDS in Songpa-gu, Seoul on August 30 last year, taking a commemorative photo with employees.
[Photo by Samsung Electronics]

Employees earning between 88 million and 150 million KRW annually must pay income tax ranging from 15.9 million to 37.6 million KRW according to the labor income tax rate. For example, if an employee or their child receives 1 million KRW in university tuition as part of their salary, the actual amount received from an 88 million KRW annual salary is only 819,000 KRW after tax. For a 150 million KRW salary, only 481,000 KRW out of 1 million KRW is received. However, if the tuition is provided through the in-house welfare fund, the full 1 million KRW can be received. Simply put, employees effectively receive 18.1% to 51.9% more money than if they received it as salary. The average salary of Samsung Electronics employees is 138.95 million KRW.

As of the end of 2021, Samsung Electronics' welfare expenses per employee amounted to 22.94 million KRW. This is 4.2 times the average of 5.51 million KRW among major affiliates of the other top 10 companies. It is also 2.3 times the 9.83 million KRW of the second-ranked GS Caltex. The amount increased further last year. At the end of last year, total welfare expenses reached 3.2204 trillion KRW, a 24% increase from the end of 2021. Dividing by the number of employees as of June last year, the welfare expenses per employee were 27.31 million KRW.

In 2021, Samsung Electronics had the highest welfare expenses per employee. The following companies ranked next are GS Caltex, LG Electronics, Hyundai Oilbank, E-Mart, Lotte Chemical, SK Hynix, Hanwha Solutions, POSCO (Steel), and Hyundai Motor Company.

Samsung Electronics has increased welfare expenses every year regardless of business conditions. Over the past 10 years, Samsung Electronics' operating profit per employee decreased three times?in 2014, 2015, and 2019. Among major affiliates of the top 10 companies, only Samsung Electronics and SK Hynix have increased welfare expenses every year for 10 years. However, SK Hynix's welfare expenses per employee are 4.26 million KRW, which is only 18.6% of Samsung Electronics'. Some companies have even reduced welfare expenses. For example, POSCO and Hyundai Oilbank reduced welfare expenses five times over the past 10 years.

Over the past 10 years, Samsung Electronics' welfare expenses increased by 93.4%. Lotte Chemical and SK Hynix followed with increases of 153.5% and 126.6%, respectively. The high increase rate for Lotte Chemical is due to hiring over 1,300 employees in 2020, which significantly raised welfare expenses per employee from the 3 million KRW range to the 5 million KRW range. Companies that have steadily increased welfare expenses regardless of employee numbers are Samsung Electronics and SK Hynix.

Samsung Electronics' welfare policy is differentiated by employee education and discounts on its own electronic products. The company is expanding employee education programs in academic research and artificial intelligence (AI). Since 2021, the welfare point allowance has been increased from 700,000 KRW to 1 million KRW. These points can be used to purchase Samsung Electronics home appliances, health foods, meal kits, and to book hotels and leisure facilities. Additionally, employees receive welfare benefits such as free comprehensive health checkups at Gangbuk Samsung Hospital and free admission tickets to Everland. Spouses can also receive the health checkups.