13,000 More Workforce
Despite a sharp decline in operating profits, the top 50 companies in the stock market (KOSPI) have increased their workforce by more than 13,000 employees.
According to the semi-annual reports released on Aug. 16, the combined operating profit of the top 50 companies in the KOSPI index, excluding financial firms, for the second quarter amounted to 14.1251 trillion won (US$10.55 billion), marking a 62 percent decrease from 37.2197 trillion won recorded in the same period last year. The performance decline of major domestic semiconductor companies, such as Samsung Electronics with an operating profit drop of 13.4284 trillion won and SK hynix turning to a loss, played a decisive role in this downturn. Even when excluding Samsung Electronics from the list of 50 companies, the second-quarter operating profit plummeted by over 9 trillion won from 23.1226 trillion won to 13.4566 trillion won.
However, the total number of employees across these 50 companies stood at 571,328 by the end of June this year, marking an increase of 13,554 compared to the 557,774 reported during the same period of the previous year. Despite the downturn in the semiconductor industry, significant net employment growth of nearly 8,000 individuals from major semiconductor players like Samsung Electronics and SK hynix is seen as a noteworthy factor. As of June 30, Samsung Electronics had a total of 124,070 employees, witnessing a year-on-year increase of 6,166 individuals and securing the top position in terms of overall net employment. SK hynix expanded its workforce by an additional 1,622 individuals, positioning itself at the third spot.
Even in the face of declining performance, there is an interpretation that major semiconductor companies are ramping up their workforce as a strategic move to prepare for the upcoming growth cycle. This is particularly seen as a response to the expanding demand for next-generation artificial intelligence (AI), which necessitates increased investments and production in technologies such as High Bandwidth Memory (HBM). This phase is crucial for gearing up capacities and investments to meet the growing AI demand, making it challenging to slow down the pace of employment.
In Korea, even second-generation battery companies that have emerged as a future growth sector have contributed to job creation by increasing their workforce by thousands. LG Energy Solution added 1,688 employees in a year, recording the second-highest net employment after Samsung Electronics. Moreover, other battery-related companies collectively generated over 3,500 job opportunities, including POSCO Future M with 740 employees, Samsung SDI with 659 employees, SK Innovation with 230 employees, Korea Zinc with 191 employees, and Kumyang with 55 employees.
Some companies have resorted to belt-tightening measures, leading to a reduction in their workforce. Among these, Hanwha Solutions saw a decrease of 1,242 employees, primarily due to organizational changes like personnel restructuring. Notable workforce reductions were also seen at KT by 746 employees, LG Electronics by 594 employees, Naver 567 employees, Samsung Electro-Mechanics by 380 employees, and Korea Electric Power Corporation (KEPCO) by 372 employees. KT has been reducing its workforce since 2020 through measures like voluntary retirement to address its inverse pyramid structure. As a result, its workforce, which was over 23,000 in 2018, decreased to 20,117 in the first half of this year. Naver has been controlling costs to improve profitability, while KEPCO has been downsizing its workforce in line with the government’s public sector reform policy.
In addition, other major companies showed a trend of increasing their cash reserves and liquid assets by around 30 trillion won from the end of last year until the end of June this year in preparation for the ongoing economic slowdown. During this period, the combined cash and liquid assets of the top 50 companies in terms of market capitalization grew by 15 percent, going from 209.71 trillion won to 239.68 trillion won. The significant contribution to this expansion is attributed to the substantial increase in Samsung Electronics’ cash and liquid assets, which rose from 49.6807 trillion won to 79.9197 trillion won.
As a result, the corporate governance transaction market, which had been sluggish for a while, is expected to rebound after the economic recovery, with a focus on acquisitions and mergers (M&A) initiated by large corporations.