Expensive Personnel
According to industry sources, the 19 business groups in Korea that had more assets than the rest last year paid a total of 60.9 trillion won (US$51.1 billion) in personnel expenses via their listed subsidiaries in 2014, to record a 6.6 percent increase from a year ago. Meanwhile, their combined sales edged up by just 0.8 percent, from 751 trillion won (US$630 billion) to 756 trillion won (US$635 billion) during the same period. With the rate of increase in personnel expenses exceeding that in sales by a significant margin, the ratio of the expenses to sales went up from an average of 7.6 to 8.0 percent between 2013 and 2014.
The ratio reached 10 percent for the Hyundai Motor Group. Specifically, the amount of its personnel expenses increased 800 billion won (US$672 million) a year to 14 trillion won (US$12 billion). The ratio amounted to 14.4 percent in the Hyundai Motor Company, where the personnel expenses and the sales increased 3.6 percent and 3.2 percent to 6.2 trillion won (US$5.2 billion) and 43 trillion won (US$36 billion), respectively.
In the Samsung Group, labor costs increased by 1 trillion won (US$839 million) to 21.5 trillion won (US$18.1 billion), and the ratio added up to 8.4 percent. Samsung Electronics’ sales declined by 13 percent to 137.8 trillion won (US$115.7 billion), but its labor costs gained 3.5 percent to 11.7 trillion won (US$9.8 billion). In the electronics manufacturer, the ratio went up by 1.3 percentage points to 8.5 percent.
The LG Group’s sales fell 1.0 percent to 101.6 trillion won (US$85.3 billion), while its personnel expenses jumped by 9.3 percent to 8.9 trillion won (US$7.4 billion), and the ratio increased from 7.9 percent to 8.7 percent. In LG Display, the ratio rose by 1.7 percentage points to 10.2 percent, and labor costs increased by 17.8 percent year on year to 2.6 trillion won (US$2.2 billion).
The Hyundai Heavy Industries Group’s sales and personnel expenses decreased by 2.3 percent to 31.4 trillion won (US$26.4 billion), and increased by 12.3 percent to 2.7 trillion won (US$2.3 billion), respectively. In the Hanwha Group, the costs rose from 1.7 trillion won (US$1.4 billion) to 2 trillion won (US$1.7 billion), with the ratio to sales edging up to 6.4 percent. The Hanjin Group was the only one of the top 10 that recorded a negative year-on-year growth in labor costs.