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  • Direct labor costs of businesses increase 5.0 percent while labor welfare costs decrease 8.5 percent (LABOR TODAY777)
DATE: 2011-09-06 VIEW: 201
DOWNLOAD: LABOR777.doc labor777(kor).hwp
The monthly labor cost to a business to employ one worker exceeded four million won on average last year

In addition, there were great disparities in labor costs and labor welfare costs between different industries and between small and large companies, which attested to the fact that the socio-economic divide was not improved.

On August 30, the Ministry of Employment and Labor released the results of a survey conducted on 3,273 businesses with more than 10 regular workers to study labor costs in 2010. The findings of the survey showed that the average monthly labor cost per employee amounted to 4,022,000 won, a 4.0 percent increase from the previous year’s 3,866,000 won. The labor cost is the sum of expenses for a company to hire and keep an employee, comprised of such direct labor costs as regular wages, overtime payments, performance-based payments and bonuses as well as such indirect labor costs as severance payments, welfare and training expenses.

The findings by industry show that the labor cost of the finance and insurance industry was 7,139,000 won, the highest among industries. The lowest was the facility management and support services industry at 2,018,000 won. The findings by size of the businesses show that the labor cost of enterprises with fewer than 300 employees was 3,122,000 won, only 60.4 percent of that of those companies with more than 300 employees, which recorded 5,169,000 won.

Statutory welfare expenses in the indirect labor cost, such as premiums for the national pension program, workers’ compensation and employment insurance, inched up 2.9 percent to 267,000 won from the previous year’s 259,000 won. On the contrary, non-statutory welfare expenses such as housing expenditures, food expenses and childcare support costs dwindled by 8.5 percent to 169,000 won per person from the previous year’s 185,000 won.

Notably, the average training expense per employee in the indirect labor cost was 24,500 won, a 1.6 percent drop from 24,900 won of the previous year. As for large companies, the amount slightly climbed to 45,800 won from 44,800 won, but small and medium-sized enterprises witnessed a decrease to 7,800 won from 8,200 won. The investment amount by small businesses stood at only 17.0 percent of that of large companies.

1) Direct Labor Costs include regular wages, overtime payments and bonuses
2) Statutory Welfare Expenses are what businesses are required to pay according to regulations, such as premiums for the national pension program, health insurance, employment insurance and workers’ compensation.
3) Non-statutory Welfare Expenses are what businesses voluntarily pay for the sake of their employees’ welfare, including housing expenditures, health care costs and meal expenses.
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