[Column] The ever-growing corporate role

Yeom Jae-ho

The author is an emeritus professor and former president of Korea University.

A recent survey on the performance of social organizations shows an overwhelmingly high approval rating for large companies over public institutions, including the government. According to the survey, 72 percent of respondents gave the highest score to hospitals (probably due to the Covid-19 pandemic), followed by large corporations (52 percent), universities (36 percent), civic groups (29 percent), the government and public entities (26 percent), religious groups (21 percent), the press (16 percent) and political parties (5 percent).

Last year, total sales of Samsung Electronics at 300 trillion won ($230.4 billion) took up 14.5 percent of Korea’s GDP at 2,057 trillion won, followed by Hyundai Motor (142 trillion won), SK Group (134 trillion won), Kia Motors (86 trillion won) and LG Electronics (83 trillion won). The large share of big companies in our economic pie suggests the great role they play in our society.

Private companies endlessly innovate the way they do business, by emphasizing their environmental and social responsibility as well as transparent governance. After the Korea Chamber of Commerce and Industry (KCCI) declared a new entrepreneurship to meet the challenge of the times, Posco accentuated corporate social responsibility by aggressively participating in civic activities for the benefit of our society. Without realizing social values, enterprises cannot ensure their economic gains in the longer term. They strive to innovate faster than other organizations as they cannot survive unless they change. But colleges, government, the media, religious groups, labor unions and political circles are not only insensitive to such challenges but also lack the will to innovate themselves. They stick with the 20th century paradigm of operation in the cocoon of their vested interests even before the turbulent wave of change in the 21st century.

What attracts our attention is the dazzling pace of change in the corporate sector. An increasing number of companies are abandoning their bureaucracy of the past and rushing to create a flexible work environment for their employees, as seen when ICT companies in Pangyo install fitness centers, saunas, nap rooms, music halls, indoor golf driving ranges and free food corners in their workplaces. There are no fixed seats or time limits to reporting to work. Some even allow employees to work from home and take vacations when necessary. Employees of Baedal Minjok (Baemin), the operator of the popular food delivery app, can choose to work overseas — Amsterdam, Chiang Mai, Tokyo or Perth, Australia — for one month if they want. Some employees even choose to live in Jeju for a year — all thanks to the increasing focus on work-life balance.

Private corporations may have to tackle social issues like singlehood, low birthrate, high jobless rate and frequent turnovers from now. Pension reform has become a hot issue in Korea, let alone in France. Both governments want to revamp their national pension systems that could end up saddling future generations with more financial burdens while forcing them to take less money after retirement. It is natural that their young people strongly resist the move.

But you don’t have to solve the puzzle by changing the national pension system alone. German companies took the lead in addressing the issue of after-retirement welfare from early on. Krupp Group, a German steel company famous for Thyssenkrupp Elevator, introduced a corporate pension plan in 1858. If employees leave the company after five years of work, it provides employees with a corporate pension amounting to 15 percent of their last annual salary; after 35 years of work, the amount soars to 75 percent; if retired employees die, 50 percent of their last salary goes to their wife and five percent to their children. Bertelsmann SE & Co. — a multinational German media group with Penguin Random House, BMG and RTL Group all under its arm — also offers employees who worked for 30 years, a hefty pension worth 42 percent of their last salary until death.

Another option is to migrate from the national pension program to a scheme akin to the Korea Teachers Pension in which employees and employers jointly share the cost. Or small and mid-size companies can create a corporate pension plan under the guidance of the Korea Federation of SMEs. It is even better for private firms to deposit money for the future of their employees — and for their own future — by participating in corporate pension rather than simply handing out hefty bonuses to their employees during an ephemeral boom.

Many companies are faced with a serious level of turnover rates. As a result of a heated battle for companies to scout competent workers from their rivals, Korean worker salaries have long exceeded those of their Japanese counterparts. Increased salaries and bonuses only help trigger inflation and weaken the competitiveness of our labor productivity. The public and private sectors must create a harmonious society where anyone can work for a long period of time with a strong sense of community just like family. I hope that companies takes the lead in innovating our pension system by rolling up their sleeves to cut the Gordian Knot before it is too late.

Translation by the Korea JoongAng Daily staff.