[Lowest Share of Large Corporations] Sustained Growth of National Income Difficult... Directly Linked to Birth Rate

South Korea's Large Corporations Account for 0.09%... Lowest Share of Jobs
Impact on Per Capita GNI... Gap in Working Conditions Between Large and Medium-Sized Companies
Higher Utilization of Parental Leave System in Large Corporations

An analysis has emerged showing that per capita Gross National Income (GNI) is determined by the proportion of large enterprises among all companies. This is because wages differ according to the size of the business, and the more large enterprise jobs there are, the more they contribute to the increase in per capita GNI. The increase in GNI ultimately affects the quality of life and birth rate of the population.

According to a survey by the Korea Economic Research Institute on the 24th, countries with a high proportion of large enterprises among the Organisation for Economic Co-operation and Development (OECD) top-ranking countries such as Switzerland, the United States, Germany, and Luxembourg also rank high in per capita GNI. Conversely, countries with a low proportion of large enterprises such as Greece, Italy, Portugal, and Spain were found to have low per capita GNI.

GNI is the total income earned by a country's residents from production activities both domestically and abroad, and dividing this by the population gives the per capita GNI. Since GNI captures economic activity from the perspective of national income, it is more useful for assessing the quality of life of citizens than Gross Domestic Product (GDP), which aggregates economic activity from the production side of companies.

According to the Korea Development Institute (KDI), in 2022, wages for workers in businesses with 5 to 9 employees were only 54% of those in large enterprises with 300 or more employees. Wages in relatively large businesses with 100 to 299 employees were also only 71% of those in large enterprises. However, the number of wage workers in large enterprises with 300 or more employees in South Korea accounted for only 18.4% of the total, showing that most existing jobs are in small and medium-sized enterprises (SMEs).

As of 2021, the proportion of jobs in companies with 250 or more employees in South Korea was 14%, the lowest among OECD countries. The OECD distinguishes large enterprises and SMEs based on 250 employees, not 300. South Korea’s level is very low compared to Germany (41%), Sweden (44%), the United Kingdom (46%), France (47%), and the United States (58%). The Korea Industrial Federation Forum projected that if South Korea’s proportion of large enterprises rises to 0.19%, similar to Ireland (17th) or Norway (18th), which are mid-level OECD countries, about 2.52 million new jobs would be created.

Not only wages but also the utilization of maternity protection systems such as maternity leave and parental leave is relatively higher in large enterprises. This has been found to contribute to improving the birth rate. According to last year’s Ministry of Employment and Labor report on parental leave utilization, only 50.8% of businesses with 10 to 29 employees responded that "everyone who needs it can use it," whereas this rate reached 95% in large enterprises with 300 or more employees.

In a related report, the Korea Industrial Federation Forum stated, "Large enterprise workers have marriage and birth rates about 1.4 times higher than SME workers," and emphasized, "It is urgent to improve the ecosystem to support existing large enterprises to become global companies and SMEs to grow into unicorn companies." They added, "It is impossible for SMEs alone to compete with companies from the US, Europe, and rapidly growing Chinese companies," and stressed, "Large enterprises should lead global competition at the forefront, while SMEs should cooperate from the rear in global competition."

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