The Korea Chamber of Commerce and Industry building in Seoul (Image courtesy of Yonhap)
SEOUL, Sept. 30 (Korea Bizwire) — South Korea’s corporate ecosystem has been steadily weakening over the past decade, with fewer employees per company and a rising share of struggling firms unable to cover even their interest payments, a new report shows.
According to a study released Sunday by the Korea Chamber of Commerce and Industry (KCCI), the average number of employees per company fell to 40.7 in 2023, down from 43 in 2016.
The figure had climbed briefly in the mid-2010s but has since stagnated, reflecting what KCCI called the “proliferation of small-scale firms without robust mid-sized growth.”
The report also highlighted the growing prevalence of “marginal firms”—businesses that fail to generate enough operating profit to pay interest for three consecutive years. Their share rose from 13.6 percent in 2017 to 17.1 percent in 2024, with labor productivity at just 48 percent of healthier firms.
Mid-sized companies, long regarded as the backbone of the economy, are also in decline. Firms employing 50 to 299 workers numbered 9,508 in 2023, down from more than 10,000 a decade earlier.
KCCI warned that unchecked, this trend could deepen inefficiencies in resource allocation and further erode the country’s economic resilience.
The group urged policymakers to pivot toward a “scale-up economy” by expanding funding for startups with high early productivity and easing financial regulations to draw more private capital into advanced industries such as artificial intelligence.
The chamber also recommended shifting small-business support from blanket aid to selective, performance-based funding, while revising rules on corporate venture capital to encourage greater investment flexibility.
“South Korea’s current shrinkage-driven ecosystem prevents high-potential companies from scaling up at the right time,” said Kang Seok-koo, head of research at KCCI.
“We must shift policy priorities from protection to growth and activate private capital markets to break through the nation’s productivity stagnation.”
Ashley Song (ashley@koreabizwire.com)
