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S.Korea's top firms to lift investment, recruit fewer workers in 2015
[SEOUL] South Korea's 30 biggest conglomerates will increase investment 16.5 per cent in 2015 from a year ago, but will hire fewer new employees due to increased labour costs, business lobby group the Federation of Korean Industries (FKI) said on Monday.
Samsung Group, Hyundai Motor Group and other conglomerates will increase their total investment to 136.4 trillion won (S$167 billion), excluding overseas deals or gains in stakeholdings, the FKI said.
The total number of new recruits this year, however, will fall 6.3 per cent from 2014 to 121,801 employees, but overall, the total number of employees will see a slight increase of 1 per cent to 1,180,651 as some companies raised the retirement age ahead of a new hiring law due to take effect next year. "The decreased ability to recruit new entrants due to the extension of retirement age and higher labour costs due to the increase of base wages appear to have greatly affected new recruitment," the FKI said in a statement.
South Korea has raised the retirement age from 55 to 60 for businesses hiring 300 employees or more starting January 2016. Many companies have also increased wages, as well as statutory benefits such as overtime allowances and severance pay since a 2013 Korean supreme court ruling.
South Korea's legion of older workers has helped keep the jobless rate low but has exacerbated record low employment among the young - less than half of those aged 15 to 29 have jobs. It is also a cause of the decade-long stagnation in wage growth, dampening consumption.
The country's finance ministry is encouraging companies to increase investment and hiring, setting aside 15 trillion won in funds from the Korea Development Bank that will be used to match company investments.
The findings were based on a late February-early March survey of the country's biggest conglomerates excluding financial groups, FKI said.