Average paychecks barely changed during year’s first half

The average paycheck of employees working for the country’s top 30 companies amounted to 38.4 million won ($34,700) in the first half of the year, a miniscule 0.4 percent increase from the first six months of last year.

The increase was lower than inflation in the first half of the year, at 0.9 percent, leading some analysts to believe the current situation may be a prelude to possible deflation.

“If conglomerates don’t raise employees’ pay, spending will shrink, and this will affect the companies’ performance negatively, which will in turn lead to a situation where the company won’t be able to raise salaries,” said Joo Won, a senior research fellow at Hyundai Research Institute.

“Eventually, prices on products and services will fall persistently, and this will lead to deflation and the economy losing its steam.”

Just a year ago, the average pay of employees at the top 30 companies rose 5.9 percent, a stark contrast to this year’s first-half figure. The significant drop in salary growth largely came from a huge pay cut taken by employees in the troubled shipping and shipbuilding industries, which are undergoing restructuring.

When compared to the first half last year, the average salary that Daewoo Shipbuilding and Marine Engineering (DSME) employees received in the first half this year was smaller by 6.5 million won, while employees at Hyundai Heavy Industries and Samsung Heavy Industries saw an average pay cut of 6.48 million won and 2.5 million won.

In the process of belt-tightening, paychecks by registered executives barely changed. The average salary of registered executives at the top 30 companies amounted to 568.7 million won in the first half, just slightly up from 567.3 million won a year ago.

The steel and construction industries, which are speculated to be the next target of restructuring after shipping and shipbuilding, saw the smallest average executive salary.

Registered executives at construction company Hyundai E&C received the smallest paychecks, averaging 125 million won. Steel company Posco and construction company Daewoo E&C trailed behind on the lower end of the spectrum with 206 million won and 295 million won.

At the country’s three largest shipbuilders, the top management had either turned in their salary or suffered a much deeper pay cut then their employees.

Choi Kil-seon, chairman and co-CEO of Hyundai Heavy Industries, along with his co-CEO and company president, Kwon Oh-gap, worked without pay this year. Park Dae-young, CEO of Samsung Heavy Industries, similarly stopped accepting pay last month. DSME CEO Jung Sug-leep agreed to a 20 percent cut to his base salary last September.

In contrast, the most generous companies were in telecommunications. High-ranking executives at LG U+ received the highest average salary in the first half, nearly 2 billion won. This was followed by Samsung executives with an average 1.85 billion won.

An official at LG U+ said the company’s astronomical average figure was the result of a 1.77 billion won retirement check made out to company adviser Lee Sang-chul, a former vice chairman and CEO. “The actual annual payment made out is much smaller,” the official said. LG U+ doled out nearly 4 billion won total to executives in the first half.

On top of the slow wage growth, leading companies in the first half have been cutting back on employees. The number of salaried workers at the top 30 conglomerates shrank 1.5 percent from 534,825 at the end of last year to 526,952 six months later.

Electronics companies shed the most workers. LG Electronics let go of 4,676 employees, and Samsung Electronics let go of 2,172 during the first six months of the year.

The shipping and shipbuilding industries also saw the number of salaried workers shrink after many applied for voluntary retirement in the midst of cost-cutting. Samsung Heavy Industries had 1,362 employees leave, while Hyundai Heavy Industries let go of 820 people and DSME cut 318.

Other companies saw a more upbeat first half.

The country’s leading automaker, Hyundai Motor, had the most hires in the first half, taking on an additional 945 salaried workers.

Employees at SK Telecom received the highest average pay among all companies in the first six months, with 67 million won.

Analysts speculate that by the end of the year, employees at the nation’s No. 1 telecommunications company could take home an average 134 million won in annual salary, putting it on par with Samsung Electronics, where average annual salary is roughly 110 million won.

Employees at oil refinery S-Oil saw the biggest pay raise in the first half. When compared to the first six months of 2015, the average salary of employees at S-Oil rose 38.6 percent. Executives at the company, though, received an average 51.9 percent pay cut.

Big retailers including E-Mart and Lotte Shopping, which owns Lotte Mart, gave their employees less than half the average of the top 30 companies, making their wages some of the lowest in the country. The average paycheck of employees at E-Mart and Lotte Shopping in the first half was 15 million won and 17.8 million won.

BY MOON HEE-CHUL [lee.hojeong@joongang.co.kr]