SK to expand financial support for contractors

SK Group, one of the nation’s largest conglomerates, promised on Tuesday to expand financial support for its suppliers, an apparent response to President Moon Jae-in’s policy goal of establishing fairer business conditions for small businesses in Korea.

The move comes two days ahead of a scheduled meeting between heads of major conglomerates and the progressive president. When he announced his plan for the country’s economy during his five-year term, Moon stressed fair competition and “mutual growth” between conglomerates and their contractors, who often feel bilked by big companies.

The group’s chipmaker, SK Hynix, will contribute 100 billion won ($ 89.5 million) to a fund that gives suppliers cash to pay their contractors down the supply chain. It will also contribute 60 billion won to a fund that offers low-interest loans to SK Group’s suppliers. The fund currently has 480 billion won and will expand to 620 billion won after contributions from other affiliates.

In addition to that, SK Telecom has pledged to raise its contribution to 250 billion won by 2019.

With more money, SK Group decided to expand the beneficiaries of its funds to contractors of the conglomerate’s suppliers.

SK affiliates also plan to improve payment schemes to ensure liquidity at smaller suppliers.

SK Hynix and the group’s holding company, SK C&C, said they would double payments to its direct suppliers. The decision will translate to 2.1 trillion won in cash payments from the two companies.

SK Telecom wants to offer better perks for suppliers. The mobile carrier plans to build a separate center dedicated to supporting suppliers near its office building on Eulji-ro in central Seoul. From next year, suppliers will be able to use the office space for employee training, seminars and technology exhibitions.

SK Telecom also vowed to expand support for children’s school expenses for workers at direct suppliers and their contractors by 2019.

In the past week, conglomerates have been scrambling to release plans that match the president’s job creation agenda.

Earlier on Monday, another conglomerate, Doosan Group, announced it would move its contract workers to salaried roles as soon as possible, and last week, Hyundai Motor and its affiliate Kia Motors announced a 50 billion won fund to support suppliers and their contractors.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]