KEPCO to downsize workforce amid snowballing debt
KEPCO CEO Kim Dong-cheol speaks during a meeting with company officials at company's headquarters in Naju, South Jeolla Province, Oct. 5. Courtesy of KEPCO
The Korea Electric Power Corporation (KEPCO) will downsize its workforce to help reduce its snowballing debt, which has soared to over 200 trillion won ($147.6 billion), according to officials from the state-run utility company, Monday.
A KEPCO official said the state-run company will accept voluntary resignations from employees, adding that no downsizing plan has been made official yet.
The company is due for an audit at the National Assembly on Thursday, and the CEO will announce the new self-reliant rescue plan around that time, he said.
"The emergency plan will include reshuffling the entire organization," the official said. "It will include the scale of the downsizing. This was hinted at by Kim when he had his first meeting with news reporters in Sejong."
The news came as the company's CEO Kim Dong-cheol said earlier this month that he would announce a set of measures to resolve the debt. As of last June, KEPCO's total debt came to 201.4 trillion won, the largest amount among all Korean listed firms. It was also the first time that the company's debt surpassed 200 trillion won.
It is the second time that the company has downsized its organization. In 2009, 420 officials voluntarily left the company so as to help the organization survive.
This year, some 5,700 senior-level officials are expected to pay back to the company some portions of their wages corresponding to their raises this year. Observers said that the collected money will be used to prepare a severance pay pool for those resigning starting this year.
KEPCO headquarters in Naju, South Jeolla Province / Yonhap
Alongside the debt, KEPCO's sales deficit has been over 47 trillion won since 2021.
To tackle the financial hurdles, KEPCO is expected to raise its energy rate price nationwide within this year. Kim said earlier this month that raising the rate by 25 won per kilowatt-hour (kWh) should be implemented to "normalize" the company's operations. However, he kept quiet regarding whether he would adjust wages for employees or downsize the organization as additional measures. He said such measures need more discussions with the company's labor union.
KEPCO has over 23,000 employees, some 78 percent of whom are members of the company's labor union. Such a significant portion makes it almost impossible for the company to execute the CEO's directives without the consent of its workers.
This was why Kim, upon becoming the company's new CEO last month, was burdened with pressure, including criticism from the country's Trade, Industry and Energy Minister Bang Moon-kyu, who urged him to consider every possible self-reliant measure to reduce its debt, such as selling its assets or freezing wages, before deciding to downsize the organization.