Large Corporations Fueling 'Wage Inflation'... Employment Down by 4,500 but Labor Costs Increased by 2.4 Trillion Won

Analysis of 120 Companies by CXO Research Institute: 'High Wages-Low Employment' Structure
27 Companies with Average Annual Salaries Over 100 Million KRW for Employees Below Manager Level Last Year
"Top-tier Companies' Salary Growth Rate Accelerates... Competitiveness Weakens"

The labor costs for employees at 120 major domestic companies increased by more than 2 trillion won in one year, but employment decreased by about 4,000 people. As the average annual salary per employee rose, the number of companies where the average annual salary for employees below the manager level exceeded 100 million won increased to one in four.

There are concerns that the 'high-wage, low-employment' structure could weaken corporate competitiveness.

Hyundai Motor Group Chairman Chung Euisun is seen taking photos with employees after attending the 'Heart Counseling Talk Concert' for employees on June 16 last year.
[Photo by Hyundai Motor Group]

On the 30th, Korea CXO Research Institute, a corporate analysis specialist, released data titled 'Comparison Analysis of Labor Costs, Employment, and Average Salaries of Domestic Large Corporations.' They examined business reports from 2019 to 2022 for 120 companies ranked in the top 10 by sales across 12 industries.

The number of employees at the 120 surveyed companies last year was counted at 772,068, the lowest since 2019. This represents a decrease of 4,560 people (0.6%↓) compared to 2021. The numbers fluctuated significantly: 779,365 in 2019 → 775,310 in 2020 → 776,628 in 2021 → 772,068 last year.

While employment fluctuated, labor costs steadily increased. Labor costs rose from 64.3282 trillion won in 2019 → 66.2873 trillion won in 2020 → 74.772 trillion won in 2021 → 77.1731 trillion won last year. Last year's labor costs increased by 3.2% (2.4011 trillion won) compared to the previous year.

This means labor costs increased enough to pay over 20,000 employees an annual salary of 100 million won, yet employment decreased by 4,560 people. The CXO Research Institute stated, "This result proves that the employment formula, where an increase in labor costs leads to an increase in the number of employees, no longer holds true for large corporations."

The company that increased labor costs the most in one year was Hyundai Motor Company. Total employee salaries rose from 6.8872 trillion won in 2021 to 7.6487 trillion won last year, an increase of 761.5 billion won (11.1%). SK Hynix also increased from 3.3379 trillion won in 2021 to 4.0601 trillion won last year, a rise of 722.1 billion won (21.6%).

As labor costs increased and employment decreased, the average annual salary per employee naturally rose. The average salary of employees at the 120 surveyed companies increased from 82.53 million won in 2019 → 85.49 million won in 2020 → 96.28 million won in 2021 → 101.96 million won last year.

The number of companies with an average employee salary exceeding 100 million won increased annually: 10 in 2019 → 13 in 2020 → 25 in 2021 → 36 last year.

Meritz Securities headquarters. [Photo by Meritz Securities]

The company with the highest average employee salary last year was Meritz Securities, with an average salary per person reaching 202.9 million won. NH Investment & Securities (175 million won), S-Oil (171.07 million won), SK Telecom (144.42 million won), Mirae Asset Securities (140.56 million won), Kumho Petrochemical (140.12 million won), Kakao (139 million won), Samsung Fire & Marine Insurance (136.55 million won), Samsung Electronics (135.36 million won), and SK Hynix (133.84 million won) also ranked in the top 10.

There were 27 companies in the '100 million won club' for annual salaries of employees below the manager level last year. This number increased annually from 7 in 2019 → 8 in 2020 → 19 in 2021 → 27 last year. The top 10 companies by average salary for regular employees were NH Investment & Securities (168.44 million won), Meritz Securities (168.22 million won), S-Oil (166.78 million won), SK Telecom (137.33 million won), Kakao (136.96 million won), Samsung Fire & Marine Insurance (134.09 million won), Samsung Electronics (130.79 million won), SK Hynix (129.97 million won), Kumho Petrochemical (129.63 million won), and Mirae Asset Securities (129.13 million won).

The electronics industry ranked first in average salaries for employees below the manager level by industry, with an average of 117.46 million won last year. Information and communications (116.15 million won), finance (109.52 million won), and automotive (103.76 million won) were also included in the 100 million won club. Steel (97.9 million won) and petrochemicals (97.12 million won) belonged to the 90 million won group. The 70 to 80 million won group included construction (84.45 million won), transportation (79.92 million won), machinery (79.78 million won), and pharmaceuticals (75.41 million won). Distribution and trading companies (61.18 million won) and food (55.88 million won) had relatively lower employee salaries.

Oilseon, director of the CXO Research Institute, said, "As automation and mechanization systems increase, the method of creating jobs by simply increasing labor costs no longer works. It has become more important to increase employment through discovering various new businesses that did not exist before."