Top 10 companies earn huge profit but employ few: report

Korea`s 10 largest companies earned 30 percent of net profits earned by all domestic corporations last year but accounted for under 2 percent of employment, the Bank of Korea said Thursday.

The IT, automobile, petrochemical and steel industries took up 45 percent of overall net profit just 5 percent of employment.

Korea posted GDP growth of 6.1 percent last year, second among the 34 member countries of the Organization for Economic Cooperation and Development and displaying a robust rebound from the global financial crisis.

The fruits of GDP growth were concentrated in certain companies and industries and employment growth remaining stagnant, lowering the “economic situation perceived” by the working class and smaller companies.

Fears are mounting that as the economic structure focused on exporters and conglomerates has strengthened, the tendency for such companies to earn growing profits but fail to increase employment will be further amplified.

The Bank of Korea said the combined ordinary net profit earned by 306,000 companies that filed corporate taxes with the National Tax Service last year reached 132.08 trillion won (124 billion U.S. dollars). Of this amount, net profit garnered by the top 10 companies, including Samsung Electronics and Hyundai Motor, reached 39.556 billion won (37.4 billion dollars).

The top 10 companies thus took up 30 percent of all net profit. The top 30 companies occupied 44.3 percent of overall net profit while the top 100 controlled 57.6 percent.

The top 10 companies employed just 1.7 percent of the working population as of 2009, however.

Significant bias in profitability by industry was also pronounced. The IT manufacturing industry reaped 20.53 trillion won (19.4 billion dollars) in net profit (15.6 percent) as the four core industries of IT, automobiles, petrochemicals and steel earned 60.08 trillion won (56.8 billion dollars) in net profit, or 45.6 percent of combined net profit.

Yet these four sectors accounted for just 5.4 percent of national employment as of 2009, however, a decline from 6 percent in 2007.

Hyundai Heavy Industries saw its net profit surge more than 75 percent last year from 2009, but its number of employees fell by 760. POSCO also saw sales rise more than 20 percent and net profit 32 percent, but the number of staff fell by 125.

redfoot@donga.com