June 01, 2014

Top South Korean Companies Turning to Temp Workers

The largest companies in South Korea are increasingly turning to contract workers or temporary workers to bolster their workforces. According to business planning reports from the top 20 corporations in Korea, the largest companies had a total of 12,585 contract workers employed at the end of 2013, a 15.2 percent increase from the previous year. Meanwhile, the number of regular employees remained mostly unchanged.

Kia Motors had the highest growth rate of contract workers with a 520 percent increase year-over-year. Rival automotive manufacturer, Hyundai Motors also increased their temp worker engagements by 87.5 percent from 1,727 workers in 2012 to 3,238 workers in 2013.

In Korea, a commonly held belief is that most temp workers are female. However, the female ratio of contract workers at top companies was 22.6 percent, disputing this notion.

History of Temp Workers in South Korea

After the Asian financial crisis in the late 1990s, businesses started to use temp workers, who work full-time on short-term contracts. Temporary workers offered businesses flexibility in their workforce size to deal with the uncertain economy. Temp workers also functioned as a buffer for unions, since union’s primary concerns revolved around protecting their members, mostly permanent employees. Only 3.4 percent of temporary workers in South Korea are union members.

In 2007, the National Assembly passed a law to protect temporary workers. The legislation required employers to add any temporary worker who had been engaged for more than two years to their permanent workforce. This resulted in many companies letting go of temps who were nearing the two-year limit.

Employment Figures in South Korea

South Korea’s largest industries, including electronics, automobiles, telecommunication equipment, and shipbuilding, contribute 39.8 percent to the GDP. Additionally, South Korea is one of the biggest global manufacturers and a major automobile producer, with more than 4 million cars manufactured each year.

In February 2014, South Korea’s seasonally adjusted unemployment rate hit a three-year high at 3.9 percent, up from 3.2 percent the previous month. In that month, an additional 308,800 people entered the job market, while only 112,800 jobs were created. 

South Korea Unemployment Rate, % of Labor Force