Small Businesses Face Talent Shortages Amid Competition for Skilled Workers

"There are no people."

Currently, small businesses are grappling with a significant labor shortage. They have the technology and workload but lack the workforce to carry out their tasks. The shortage of research and development (R&D) personnel has emerged as a critical issue that could determine the future of small enterprises.

Han Seong-sook, Minister of SMEs and Startups, noted during a government meeting on May 28, marking the first anniversary of the administration, that large companies' substantial performance bonuses are exacerbating the concentration of talent in these firms. She emphasized the need for policy support to help small businesses secure skilled researchers. Her remarks reflect the concerns voiced by those in the field.

In a market economy, it is natural for talented individuals to seek better compensation and working conditions. Companies achieving good results and rewarding employees with bonuses should not be criticized; rather, rewarding performance is a fundamental principle of a market economy.

The problem lies in the widening gap that threatens the balance of the industrial ecosystem. Recently, some large corporations announced performance bonuses ranging from millions to tens of millions of won, while many small businesses are struggling to survive amid high interest rates and economic downturns.

As a result, talented individuals gravitate toward large companies, leaving small businesses unable to find workers. Even researchers hired with difficulty tend to leave for better conditions after gaining a few years of experience. For small businesses, this means losing both the investment in talent development and technical know-how. If this trend continues, it could signal a decline in national industrial competitiveness.

The South Korean economy does not operate solely on the strength of large corporations. Numerous small and medium-sized enterprises support the industrial ecosystem in areas such as parts, materials, equipment, software, and research and development. This is especially true in sectors like semiconductors, biotechnology, artificial intelligence (AI), and future mobility, where the role of small but strong companies is crucial.

However, if the current trend of talent concentration in large companies persists, the technological innovation capabilities of small businesses will inevitably weaken. Reduced investment in R&D and declining productivity will further diminish wage competitiveness, creating a vicious cycle that leads to talent outflow.

The issue is that this phenomenon is not temporary. Due to low birth rates and an aging population, the working-age population is rapidly declining. The preference of young people for metropolitan areas and large companies is also intensifying. The National Statistical Office projects that the decline in the working-age population will accelerate over the next decade, suggesting that labor shortages in the industrial sector are likely to worsen.

A recent survey by the Korea Small Business Agency provides meaningful insights. About 78.4% of domestic small businesses expressed a willingness to hire foreign students and job seekers. Additionally, 63.7% believe that foreign workers can significantly help alleviate labor shortages.

Notably, 78.8% of foreign students and job seekers indicated their intention to work in South Korea. While many global talents are already studying at domestic universities and are familiar with Korean culture, they are not being connected with companies.

Companies cited the difficulty of finding suitable candidates as their biggest challenge in the hiring process. Foreign job seekers pointed to a lack of job information, language and cultural barriers, and the complexity of visa procedures as significant obstacles. This mismatch indicates that while there are individuals willing to work, companies are struggling to find them. Strengthening 'talent matching' through the establishment of a national platform to systematically connect small businesses with foreign students and job seekers is crucial for the government.

Moreover, it is essential to enhance support for small businesses in securing research personnel through incentives and to establish a more robust industry-academia cooperation system linking universities, research institutions, and companies.

The competitiveness of the South Korean economy is not solely built on the achievements of a few large corporations. Sustainable competitiveness can only be achieved when numerous small businesses, strong companies, and startups grow together. The future of industry lies where talent is found. Thus, creating an environment where small businesses can secure skilled workers is vital for revitalizing the industrial ecosystem and safeguarding South Korea's future competitiveness.

* This article has been translated by AI.

Jung Seokman