KDI "Need to Reevaluate SME Support Systems That Hinder Corporate Scale-Up"

More Large Corporation Jobs Are Needed

A national research institute has suggested that policies such as the ‘Small and Medium Enterprise (SME) Suitable Industry System’ and ‘Large Mart Operating Hours Restrictions,’ which hinder the scaling up of companies, should be reconsidered. The diagnosis is that conditions must be established to promote the scaling up of companies because only when businesses grow larger can quality jobs be created.

Senior Research Fellow Ko Young-sun of KDI announced on the 27th the report titled ‘KDI Focus - More Large Corporation Jobs Are Needed,’ which contains this content. Research Fellow Ko viewed the lack of good jobs, represented by large corporation jobs, as a cause of overheated university entrance competition and low birth rates in our society, emphasizing the urgent need to devise measures to improve this situation.

He diagnosed that promoting the scaling up of companies is necessary to sufficiently supply good jobs. Therefore, he stated, “It is necessary to identify and improve policy factors that hinder the scaling up of companies.” Accordingly, while various supports are provided to SMEs, he saw the need to reconsider policies that impose multiple regulations on large corporations.

This is because companies may have little incentive to grow into large corporations and may prefer to remain SMEs. Additionally, among SMEs, low-productivity companies should be phased out so that high-productivity companies can grow into mid-sized or large corporations, thereby raising the overall productivity of the industry. Excessive policy support can hinder this dynamism.

Adversarial and confrontational labor-management relations were also analyzed as factors preventing the expansion of company size. He said, “In large-scale businesses, forming labor unions can be easier, and due to such concerns, companies may outsource non-core businesses to subcontractors instead of increasing employment size.” He added, “The government implements numerous SME support policies, but it is necessary to evaluate and reconsider their effectiveness.”

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