South Korea’s conglomerates and their affiliates have increased their cash holdings over the past year, despite the government’s efforts to induce companies to spend them to increase employee wages and facility investment.

The combined retained earnings of 96 affiliates of the country’s top 10 family-run conglomerates reached 503.9 trillion won ($453 billion) at the end of fiscal 2014, up more than 8 percent or 37.6 trillion won from the same period a year ago, according to Chaebul.com, an online information provider of Korean large businesses.

Increased retained earnings, which are net earnings held by companies after subtracting dividends, were mostly attributable to growing economic uncertainties, analysts said.

Korea had seen its consumption and private investment dwindle, with households under high debt refraining from spending and consumer prices remaining nearly flat.

The slowdown led companies to accumulate their cash reserves, which usually reflect an improvement in their financial status.

However, their unspent capital surplus referred to holding cash for possible rainy days ahead amid a dim economic outlook. Retained earnings are normally used for core businesses and research and development to create new growth for companies.

Eighteen stock-listed affiliates of Samsung Group, the largest family-run conglomerate, had the highest reserves among Korean chaebol at 196.7 trillion won. Its retained earnings grew by 11 percent, the highest on-year increase, Chaebul.com said.

Korea’s second-largest conglomerate Hyundai Motor Group’s 11 listed affiliates saw their combined retained earnings increase from 92.8 trillion won to 102.1 trillion won in the same period.

The government introduced measures last year to impose taxes on the excessive cash reserves of conglomerates to press companies to increase dividends to revive sluggish consumption.

“Dividends can only increase when companies improve their profitability. With the won-dollar exchange increasing, companies are expected to see improvements in the first quarter,” said Lee Jae-man, an analyst at Hana Daetoo Securities.

Korea recently proposed to extend tax incentives for companies that increase spending on infrastructure such as warehouses, logistics centers and training institutes for employees. Hyundai Motor, for example, is expected to receive tax benefits following plans to build an office tower on land previously owned by the state-run Korea Electric Power Corp. in southern Seoul.

By Park Hyong-ki (hkp@heraldcorp.com)