[EDITORIALS]Supporting small businessesLarge companies are seeing sales and profits jump, but they are hiring fewer people. This is what the JoongAng Ilbo found after analyzing five years of data from the top 50 public Korean companies.
These companies recorded a 67 percent increase in sales and a 215 percent increase in net income, but their payrolls decreased by 0.4 percent. The speculation about growth without employment is now a reality at least at the nation’s large-sized companies.
The new reality is the result of a strategy taken by the companies in the wake of the 1997-1998 financial crisis. While undergoing vast restructuring, the companies adopted a strategy of honing their competitiveness without hiring more people.
But the problem is that the companies will continue to use this strategy. In an increasingly borderless world economy, businesses have no choice but to constantly restructure through such measures as production automation, spin-offs and outsourcing. It allows them to reduce payroll costs and hire more short-term contract workers.
Manufacturers make massive investments in their facilities to minimize the number of workers. Although the information technology sector is a growing one, we can’t expect it to create a massive number of jobs. While large businesses may grow in size and see profits swell, they are not going to expand hiring.
But then again, we can’t demand that businesses hire more workers. That would mean sacrificing competitiveness for the sake of employment. But we can expect new jobs when the businesses venture into a new sector or make major investments. The government should further deregulate barriers to investment.
The key to more jobs in the future lies not with the large companies but with the small-and medium-sized ones, which are responsible for 58 percent of the nation’s employment, and the service sector.
The government should nurture an environment where small-and medium-sized businesses can invest in new technology.
The government should not be stingy about assisting in such activities. The service industry should expand and become a major provider of high-end jobs, and the government should think up policies to buoy the service industry.