'Large corporations should hire young people'

The Korea Employers Federation recommended to its 4,200 member companies this year to minimize wage increases for high-wage workers as much as possible and refrain from paying excessive performance bonuses. Viewing this from a managerial perspective, it can be interpreted as a strategy to maximize profits by reducing costs. However, the Federation of Korean Industries also suggested that large corporations expand youth employment and enhance the management of small and medium-sized partners, focusing on wage stability. The goal is to actively address the dual structure of the labor market, starting with wage stability at large corporations.

As highlighted by the Federation of Korean Industries, the accumulated high rate of wage increases among large corporations and regular workers has exacerbated the wage gap, fueling feelings of relative deprivation and fostering social conflict. As of 2022, the average monthly income of workers at large companies is 5.91 million won, which is 2.07 times that of workers at small and medium-sized companies (2.86 million won). Among the top 100 non-financial listed companies in terms of sales, the number of companies with an average annual employee salary exceeding 100 million won increased five-fold in four years, from nine in 2019 to 48 last year.

The government, which neglected structural reform of the labor market, the unions of some large corporations that insistently advocated for high wage increases, and the companies swayed by their demands all bear responsibility for the entrenchment of job classism. The dual structure of the labor market, overprotected and centered on regular workers at large corporations, also undermines the creation of sustainable jobs. Companies cannot proactively hire new employees when wages are high but productivity is low and layoffs are difficult. Consequently, young people remain in the job market with few prospects, while medium-sized and small businesses struggle to attract talented individuals.

The Federation of Korean Economy's recommendation to enhance job creation capabilities by reallocating resources, garnered from curbing wage increases at large corporations, towards expanding youth employment and enhancing the competitiveness of small and medium-sized enterprises, is apt. Large corporations should acknowledge that creating quality jobs is a corporate social responsibility and actively heed the Federation of Korean Economy's suggestions. Additionally, the government must expedite labor reform post-general elections, hastening the establishment of a fair and flexible labor market, while navigating the vested interests of the labor community. Failure to address the rigidity of the labor market, where full-time workers at large corporations, constituting 12% of wage workers, monopolize opportunities without opening doors for young people, will impede efforts to break the cycle of low growth.