Only 1 in 10 Outsourcing Companies Plans to Increase Hiring This Year

[Asia Economy Reporter Kim Hyewon] A survey revealed that only one out of ten foreign-invested companies (FICs) plans to hire new employees this year.

The Federation of Korean Industries (FKI) announced on the 30th that this was the result of a survey on "Hiring and Investment Trends of Foreign Companies Entering Korea," conducted among foreign-invested companies with 100 or more employees nationwide.

The percentage of companies planning to increase new hires showed a slight change from 9.1% last year to 11.6% this year, but still remained around 10%. This is similar to the level in the year when COVID-19 first broke out, indicating that foreign-invested companies are still not free from the impact of COVID-19.

However, the FKI evaluated that the fact that the majority of foreign-invested companies (84.2%) responded that there would be little change in new hiring, and that companies planning to reduce hiring this year (4.2%) decreased compared to last year (26.7%), can be considered a somewhat positive factor.

Foreign-invested companies that said they plan to increase hiring this year cited "increased sales in Korea (47.2%)" and "filling work gaps due to turnover (30.6%)" as the main reasons. This contrasts with the recent "First Half Major Large Corporations New Graduate Hiring Survey" by the Korea Economic Research Institute (KERI), where Korean companies answered that the reasons for increasing new hires in the first half of this year were "securing future talent regardless of economic conditions (75.0%)" and "increased demand for manpower in new industries or new job categories (8.3%)." Foreign-invested companies answered that the most important factor in new hiring is "sales increase," suggesting that domestic sales must increase for employment to grow in the future.

Foreign-invested companies that have set plans for new hiring or have already hired responded that the ratio of new graduates to experienced hires is 40.2% to 59.8%, showing that the proportion of experienced hires is about 50% higher than that of new graduates.

Also, it is expected that 54.8% of new hires in foreign-invested companies will be in science and engineering fields. According to the KERI survey, the proportion of new science and engineering graduates hired by major domestic companies in the first half of last year was 61.5%, which is 6.7 percentage points higher than the 54.8% of foreign-invested companies. This indicates that foreign-invested companies plan to hire more employees outside of science and engineering compared to domestic companies.

Foreign-invested companies are expected to hire 30.2% female employees. This is a higher level than the proportion of female hires in major domestic companies. According to the KERI survey, the proportion of female college graduates hired by domestic companies in the first half of 2019 was 27.1%.

Regarding policies that the Korean government and National Assembly should focus on to create jobs, foreign-invested companies that responded to this survey answered in order: "Inducing corporate investment activation through deregulation (38.2%)", "Expanding incentives such as tax benefits for companies that increase employment (30.3%)", "Inducing additional employment through flexible working hours, etc. (13.5%)", "Expanding jobs mainly in the public sector (10.4%)", "Institutional support for the emergence of innovative industries (7.0%)", and others (0.6%). They viewed deregulation as a way to activate corporate investment, which ultimately leads to job creation.

While the majority of foreign-invested companies (85.0%) responded that there would be little change in investment in Korea this year, the response "will reduce (8.4%)" was higher than "will increase (6.6%)." Additionally, total investment by foreign-invested companies in Korea this year is expected to decrease by 0.4% compared to last year.

The most common reason for reducing investment was "following the global investment plan of the headquarters," at 32.1%. This was followed by "deterioration of headquarters' circumstances (25.0%)", "continued COVID-19 situation (25.0%)", "worsening labor environment in Korea (10.7%)", "excessive tax burden (3.6%)", and "deterioration of business outlook in Korea (3.6%)." This means that despite the ongoing COVID-19 situation, foreign-invested companies entering Korea consider the "headquarters' global investment plan" more important than any other reason.

Kim Bongman, Director of International Cooperation at FKI, pointed out, "The hiring market of foreign-invested companies entering Korea is still not free from the aftermath of COVID-19. Hiring increases only when investment or sales increase, but more foreign-invested companies plan to reduce investment this year than those planning to increase it. Our government and National Assembly should listen carefully to the fact that foreign-invested companies want deregulation to activate corporate investment for job creation."

This content was produced with the assistance of AI translation services.