BUSINESS

Labor costs at carmakers among highest last year

By Cho Chung-un
  • Published : Aug 16, 2017 - 21:46
  • Updated : Aug 16, 2017 - 21:46
The ratio of labor costs to overall revenue generated by three major automakers here was relatively higher than companies in other industries, data showed Wednesday.

According to CEOScore, a local corporate tracker, labor costs at Hyundai Motor, Kia Motors and SsangYong came to 13 percent of their sales last year, double the average of 5.9 percent at 334 companies studied. 

Hyundai`s second plant in Ulsan, South Gyeongsang Province. Yonhap

The auto industry has been waiting for a court ruling on a demand by Kia Motors’ workers to include their bonuses as part of their ordinary wages. The court is expected to make a decision within this month. Ordinary wages, or regular payments, are used as the basis for calculating various types of compensation and severance pay. If the court rules in favor of the workers’ demand, Kia, the nation’s second-largest automaker and sister company to Hyundai Motor, could face additional costs of 3 trillion won ($2.63 billion), according to industry watchers.

The companies posted a combined 1,607 trillion won in sales last year, a 1.9 percent decrease from two years ago. About 94.2 trillion won went to salaries, a 6.4 percent increase from the same period. As a result, the sales-to-labor cost ratio slightly grew from 5.4 percent to 5.9 percent, it said.

Companies in the services sector topped the list with 14 percent in 2016, though that was slightly down from 15.7 percent two years ago. Pharmaceuticals also saw a relatively high ratio at 11.1 percent. For companies from the IT industry, the ratio was 8.8 percent last year, a 0.8 percentage point increase from two years ago, while steelmakers saw the ratio growing from 4.8 percent to 5.9 percent.

Meanwhile, the ratio dropped for shipbuilders, machinery and facilities, from 8.8 percent in 2014 to 8 percent last year.

By individual companies that rely heavily on exports, LG Siltron, a producer of wafers for semiconductors, had the highest ratio at 18.9 percent followed by Nexen Tire and Samsung SDI, with 17.7 percent and 17.1 percent, respectively.

By Cho Chung-un (christory@heraldcorp.com)