Growth of corporate labor costs in South Korea sees slowdown last year
Date
9/30/2024 7:52:42 AM
(MENAFN) According to data released by South Korea's Ministry of Employment and labor on Monday, the growth of corporate labor costs experienced a slowdown last year, primarily attributed to cutbacks in bonuses. In businesses that employ more than ten regular employees, the per-capita monthly average labor cost rose by 1.9 percent year-on-year, reaching 6,131,000 won (approximately USD4,700) in 2023. This increase represents a significant decline compared to the more robust growth rates seen in previous years—8.2 percent in 2021 and 2.8 percent in 2022.
Direct labor costs, which encompass wages, overtime pay, and bonuses, also saw a slower growth rate, rising by 2.7 percent to 4,893,000 won (USD3,750) last year. This figure is notably lower than the growth rates of 8.0 percent in 2021 and 3.0 percent in 2022. The sluggish performance of corporate earnings amid an economic downturn has led many local companies to reduce bonuses, contributing to the deceleration in overall labor cost growth.
On the other hand, indirect labor costs, which include retirement benefits, training expenses, and welfare costs, experienced a decline of 1.1 percent compared to the previous year, bringing the total to 1,238,000 won (USD950) in 2023. This marks a reversal from the previous year's growth of 2.3 percent. Notably, the finance and insurance sector faced the most significant decline, with labor costs dropping by 6.3 percent last year, while the manufacturing and construction industries reported increases of 1.7 percent and 5.8 percent, respectively.
When analyzing labor costs based on company size, businesses with fewer than 300 employees saw an increase of 5.3 percent in labor expenses. In contrast, firms with more than 300 employees experienced a decrease of 1.0 percent in labor costs last year. This divergence underscores the varying impacts of the economic landscape on different sectors and company sizes in South Korea.
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