In South Korea, businesses with fewer than five employees represent approximately 62% of all companies, totaling about 1.24 million. This means many young individuals among roughly 17% of the total workforce (amounting to around 3.14 million workers), often find themselves excluded from welfare benefits.
Under current legislation, basic rights such as overtime pay, holiday pay, and annual leave are mandated only in workplaces with more than five employees. Despite discussions to amend the law and extend these benefits to all businesses, opposition from self-employed individuals and small businesses citing “potential management issues” has hindered such efforts. This discrepancy in benefits reinforces the perception among young job seekers that success is only attainable within larger corporations.
Kim, 27, a graduate of a prestigious private university in Seoul, began her career journey at a small business in early 2022. Despite warnings about limited job mobility in small companies, Kim remained determined to gain valuable experience and believed she could advance her career through her current role. However, she recently decided to leave, resolved never to return to a small-medium enterprise, and is now preparing to pursue opportunities in larger corporations.
Kim’s first-year salary amounted to 3 million won before taxes, with approximately 2 million won deposited into her account each month after deductions. However, basic welfare benefits such as annual leave, overtime, and holiday pay were not provided. Furthermore, the inconsistency of payday, determined at the CEO’s discretion, added to her challenges. Despite frequently working late nights and weekends, Kim’s frustrations grew as her salary remained insufficient. She recalled, “During college, I earned 80,000 won per hour tutoring.”
When she shared her concerns with the CEO, the response remained consistent: “We are a business with fewer than five employees, so we don’t have such benefits,” or “With the COVID-19 pandemic at its peak, event requests have significantly decreased, making it difficult for us as well.”
Statistics Korea’s 2022 data reveal a significant income disparity between employees of large corporations and small and medium-sized enterprises, with the latter receiving considerably less compensation. Employees of large corporations earn an average monthly income of 5.91 million won, while those working for small and medium-sized enterprises receive an average of only 2.86 million won.
Recent interviews conducted by The Chosunilbo with individuals aged 20 to 40 employed in small and medium-sized enterprises echoed these sentiments, highlighting the daunting considerations of marriage, childbirth, childcare, and retirement within this employment context. The sentiments were compounded by the stark income divide between large corporations and smaller enterprises, which widens significantly with age. Beginning with a gap of 1.25 million won in their 20s, it balloons to 4.52 million won by their 50s.
Park, 36, an employee at a small and medium-sized enterprise specializing in medical device development, expressed his resignation towards marriage and having children. Despite earning a respectable annual salary and saving a significant portion of his income, Park feels uncertain about establishing a household, given the soaring housing prices.
Park resides in a Hwaseong, Gyeonggi Province villa with a 100 million won deposit, earning an annual salary of approximately 40 million won before taxes. He manages to save around 1.8 million won, spending only about 600,000 won per month on living expenses. However, he said, “Even a 15-year-old apartment, which takes an hour to reach from work, costs around 300 million won for 79 square meters. I’m uncertain whether it’s feasible to establish a household with an annual savings of just 20 million won.”
Research suggests a growing disparity in the number of children based on whether parents work for large corporations or small and medium-sized enterprises. Professor Moon Young-man of Pukyong National University’s Economic and Social Research Institute analyzed data from the Korea Welfare Panel Study at the end of last year. As of 2021, households with parents employed in large corporations had an average of 1.34 children, while those working in small and medium-sized enterprises had an average of 1.02 children. The gap in the number of children has widened from 0.2 children in 2005 to 0.32 children in 2021.
Moon said, “Considering the substantial costs of education and childcare spanning approximately 20 years from infancy to adulthood, employees of small and medium-sized enterprises who are insecure about employment, income, and welfare cannot afford to have children even if they desire to.”
