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SOUTH KOREA RANKS LOWEST IN OECD FOR LARGE COMPANY JOBS

KDI says low share of employment in large companies is exacerbating the
country's low birthrate crisis

By Kim Ji-Seop,
Lee Jae-eun
Published 2024.02.28. 15:33Updated 2024.02.28. 17:23
0









South Korea ranks the lowest among the 32 countries of the Organization for
Economic Cooperation and Development (OECD) regarding the share of large company
jobs, according to the Korea Development Institute (KDI), a state-run research
institute.

KDI said the lack of well-paying jobs with great benefits has led to excessive
competition for college entrance exams, low birthrates and growing regional
disparities on Feb. 27.

According to a KDI report titled “We Need More Large Company Jobs” by KDI Senior
Research Fellow Koh Young-sun, only 13.9% of jobs in South Korea were offered by
large companies with 250 or more employees as of 2021. This figure falls
significantly below the OECD average of 32.2%, with Korea ranking last among the
32 member countries.


KDI Senior Research Fellow Koh Young-sun / KDI

The U.S. ranked first place in terms of large company job shares at 57.6%,
followed by France (47.2%) and the UK (46.4%). Even in Germany, known for the
mighty Mittelstand, or a group of stable small and medium-sized enterprises, the
share of large company jobs stood at 41.1%. Japan has a significant portion of
its workforce in large companies at 40.9%, nearly three times that of Korea.

The report used the OECD’s definition of a large company, which is 250 or more
employees. In Korea, the criteria for large companies is 300 or more employees.

Typically, jobs in large companies offer better working conditions in terms of
both pay and benefits compared to small and medium-sized companies. Data from
the Ministry of Employment and Labor shows that the wages of small companies
with 5 to 9 employees amounted to merely 54% of those paid by companies with a
workforce of 300 or more as of 2022. Companies with 100 to 299 employees offered
wages only 71% of what larger companies provided.

Big companies also provide better benefits, including parental leave. Last year,
95.1% of large companies confirmed that “parental leave is available for any
employee in need,” according to a Ministry of Employment and Labor survey. This
figure dropped to 88.4% for companies with 100 to 299 employees and 71.9% for
those with 30 to 99 employees.

Koh argues that Korea’s low birthrate crisis is exacerbated by the fact that
most of the country’s workforce is employed in small and medium-sized companies,
where taking paternal or maternity leave is often challenging.

“Although there are policies aimed at addressing the country’s declining
birthrate, putting these measures into practice is proving difficult,” said Koh.
“This is why policymakers should boost the number of jobs in large companies
that offer better childcare benefits to employees.”

The scarcity of large company jobs competition has contributed to heightened
competition for college entrance exams, as more people try to get a head start
on securing these coveted jobs. The resulting increase in private education
spending further encourages lower birth rates.

According to Koh, graduates of top universities in Korea significantly outearn
their peers from lower-ranking institutions. Koh used Korea’s national college
entrance exam scores from 1998 to 2000 to analyze the salaries of graduates from
top universities. Research showed that university graduates in the top 20% range
currently earn between 1.2 to 1.5 times more in their 20s and 40s than those who
graduated from universities in the bottom 20% range.

By the time graduates reached the ages of 40 to 44, the salaries of graduates
from top universities were 1.51 times higher compared to those who graduated
from lower-ranking universities.

“Larger businesses can create more high-quality jobs,” said Koh. He argued that
the government should reevaluate its support for small and medium-sized
enterprises, as excessive regulations on larger companies may encourage
businesses to stay small.

low birthratebirthrate crisisSouth Korea




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