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By Nam Hyun-woo
Job creation by foreign firms in Korea remained at a tepid level, though they are said to have been pressuring the government to ease regulations and provide more investment benefits.
Industry officials said Monday foreign firms operating in the country should present their specific rationale as to why the government should provide various incentives to keep them afloat before demanding more policies favorable for their businesses.
According to a Korea Trade-Investment Promotion Agency (KTIPA) report on the job creation of 2,500 foreign-invested companies in Korea, employees numbered 129,942 in 2019, up 1,918 or just 1.5 percent from the previous year. This means each company on average hired less than one person during the period.
The average number of the companies' employees was 52 in 2019, up 0.8 from 51.2 in 2018, meaning their job creation remained at a tepid level, according to the report released last week.
The situation wasn't improved in 2020, when the COVID-19 pandemic dealt a heavy blow to the global economy. Of those surveyed, only 464 companies or 18.6 percent said they have hired people, were planning to hire or were undergoing a hiring process as of Oct. 21. The number was estimated at 2,213, which means the average number of new recruits per company is still below one.
For this year and next year, more than 94 percent of the surveyed firms said they are yet to decide whether to hire more people, showing their concerns regarding the uncertainties stemming from the pandemic.
In a Nov. 30 survey by the Federation of Korean Industries (FKI) on 50 countries' trade representatives and chambers of commerce in the country, respondents said the abolishment of corporate tax benefits for foreign companies in 2019 and the mandatory 52-hour workweek program have had the biggest effect on their business activities.
"While some foreign firms are having manufacturing facilities in Korea and making some efforts to create jobs and make investments, it is also true that others' contributions to the domestic economy are relatively limited," an official at a global company here said. "If their role is limited to sending dividends to their headquarters, there will be no reason for policymakers to listen to their demands."
On the other hand, foreign firms are saying softening regulations and tax rates should come first to increase foreign direct investment into the country.
"It is like the chicken or the egg dilemma," another foreign company official said. "If foreign firms want to have eased regulations or enjoy incentives, they should understand that expectations are on them to make contribution to the local economy. At the same time, the government should also understand that certain regulations or indigenous rules in the country are discouraging firms from establishing manufacturing facilities or creating more jobs here."
