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By Jeon Jong-hwi, staff reporter

Chaebol affiliates that thrive off of funneling work to their affiliates are also major centers for low-quality employment, job figures show.

Affiliates at chaebol such as Samsung, LG, and Lotte are making massive profits off of work funneled to them within the group, but hire anywhere from 60% to 70% of their workforce indirectly. Critics are accusing them of ignoring the social responsibility to create new jobs and bucking the trend toward economic democratization.

An analysis on July 10 on employment numbers for 211 affiliates at the country’s top ten chaebol - released on July 4 in the Collection and Provision of Employment and Vocational Information - showed affiliates with more of their transactions within the group also had higher portions of irregular workers. These included Samsung Electronics Logitech, where Samsung Electronics holds a 100% stake; Hi Logistics, 100% owned by LG Electronics; Lotte Logistics, where Lotte affiliates own 49.7%; and GS Neotek, 100% owned by the younger sibling of group chairman Huh Chang-soo.

At Samsung Electronics Logitech, a Samsung affiliate, 1,434 out of 2,134 workers, or 70.5%, are hired indirectly, compared to a 20.1% average for all 2,942 companies listed on the announcement. Of the affiliate’s 1,070.8 billion won (US$1.06 billion) in sales for 2013, 979.9 billion won (US$966 million), or 91.0%, came in the form of transactions with other group affiliates like Samsung Electronics and Samsung Display. Its current net income for the year was 31.8 billion won (US$31.3 million).

Hi Logistics, an affiliate of third-ranked chaebol LG, had similar numbers. Its 2013 sales came out to 413.7 billion won (US$407.7 million), with 375 billion won (US$369.6 million) of that, or 89.7%, coming from transactions with affiliates like LG Electronics, LG Chem, and LG Display. It also had 67.4% of its workers employed indirectly, or more than three times the average. Current net income for 2013 stood at 96.9 billion won (US$95.5 million).

Similarly, Lotte Logistics, with a group-internal transaction rate of 94.0%, employed 58.0% of its workers indirectly.

The figures show companies that enjoy relative stability due to work funneled to them from other group affiliates, but continue to maximize profits by using cheaper indirectly employed workers to cut personnel costs.

“These big companies that are relatively better off in terms of their operations need to pay as much attention to their social responsibilities regarding employment as they do to making money,” said Lee Byung-hoon, a sociology professor at Chung-Ang University.

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