Employment Growth Rate of Policy Fund Supported Companies Three Times Higher Than Overall SMEs

Jungjingong, KOSME Issue Focus Published... Includes Policy Fund Support Achievements and Implications

Small and Medium Business Corporation

[Asia Economy Reporter Kim Cheol-hyun] It has been found that small and medium-sized enterprises (SMEs) supported by policy funds have shown excellent performance in job creation and other areas. The employment growth rate compared to the previous year was three times higher than the overall increase rate of SME employees.

On the 23rd, the Small and Medium Business Corporation (Chairman Kim Hak-do, hereinafter referred to as SBC) announced this in the publication of 'KOSME Issue Focus,' which contains the results of performance analysis and policy implications for SMEs supported by policy funds.

To promote the growth of outstanding small and medium ventures, SBC has provided an average annual policy fund of about 4.9 trillion KRW and approximately 20,000 cases over the past five years (2016?2020). By industry, 70.0% of the supported companies were in manufacturing, and by business age, 68.7% were startups less than 7 years old. By employee size, 95.1% were small-scale companies with fewer than 50 employees, and funds have been supplied mainly through direct and credit loans.

According to SBC’s self-analysis of the performance of SMEs supported by policy funds over the past five years, the ratio of sales to research and development (R&D) investment, sales growth rate, and employment growth rate indicators showed superior figures compared to all SMEs. The average sales-to-R&D investment ratio of supported companies over the past five years was 1.1%, and as of 2018, it was 1.5%, higher than the 0.7% of all SMEs.

Comparing the performance before and after support for policy-funded companies, the sales growth rate compared to the previous year was 10.2% in 2018 and 8.5% in 2019, higher than 5.9% and 4.2% for all SMEs, respectively. The employment growth rate of supported companies was also 7.9% compared to the previous year, higher than the 2.5% increase in the total number of SME employees.

However, analyzing the performance of supported companies by industry using the same indicators showed differences depending on the characteristics of the industry. The sales-to-R&D investment ratio was notably high in information (4.9%) and electronics (3.0%) industries related to the 4th Industrial Revolution, while sales growth rates were relatively high in other/service (21.0%) and information (15.9%) industries with favorable industrial growth. Employment growth rates were relatively high in labor-intensive industries such as other/service (15.0%) and textiles (12.2%).

SBC explained that the innovation, growth potential, and employment inducement effects of industries are reflected in the performance differences by industry among supported companies. It was also noted that companies striving for innovation in traditional sectors such as food and textiles showed excellent performance, indicating the need for policy support in these areas. Chairman Kim Hak-do stated, "The superior performance of policy-funded companies compared to all SMEs demonstrates that we are fulfilling our fundamental role of achieving policy goals such as job creation through the selection of promising companies." He added, "SBC will work with the government to devise optimal support methods for regional industrial innovation and vulnerable industry structural transformation and will further strengthen customized support for regional companies, including projects to promote the growth of regional key industries."

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