Only 14 percent of South Koreans work in large companies, versus 58 percent of Americans.
Koh Young-sun, a senior research fellow at the Korea Development Institute (KDI), presented this statistic in a report titled “A Need for More Large-Company Jobs” released on Feb. 27, emphasizing the need to expand the number of large-company jobs.
According to Koh’s report, as of 2021, only 14 percent of South Koreans worked at companies with 300 or more employees. This was the lowest among OECD member countries. By the same measure, the United States had 58 percent, France 47 percent, the United Kingdom 46 percent, Sweden 44 percent, and Germany 41 percent. According to a survey conducted by the Korea Chamber of Commerce and Industry in 2023, 64 percent of college students preferred to work for large companies and 44 percent in the public sector, while only 16 percent preferred to work for small and medium-sized enterprises.
This phenomenon is due to the fact that the number of jobs at large businesses decreased after the 1998 foreign exchange crisis and has been on the uptick again but the trend is not clear. The KDI analyzed that a lack of jobs at large companies is leading to social problems such as overheated competition in college entrance examinations, declining social mobility, a drop in the nation’s fertility rate, stagnant female employment rates and the population concentration in the Seoul metropolitan area.
The report also pointed out that there is a large wage gap between large and small businesses. As of 2022, wages at companies with five to nine employees were only 54 percent of those at companies with 300 or more employees and 71 percent of those at companies with 100 to 299 employees. This gap has been growing steadily since the early 1990s and even though it has narrowed somewhat since 2015 it still remains wide.
Workers at larger companies also have an advantage when it comes to access to maternity benefits such as maternity and paternity leave. At companies with fewer than 30 employees, about 30 percent of those who needed maternity and paternity leaves were unable to take them and about 50 percent were unable to take leave to take care of babies.
The KDI noted that the size of a business is determined by many factors, many of which the Korean government can influence. It recommended that the effectiveness of policies should be checked and improved if necessary, noting that support for small and medium-sized enterprises and regulations on large enterprises can hinder business expansion. It added that it is necessary to revise and supplement systems in a productive and reasonable way by improving labor relations.