State Firms to Cut 35,000 Jobs by 2012
By Na Jeong-ju
Staff Reporter
The administration plans to slash up to 35,000 jobs, or 13.5 percent of the total payroll at 305 state-owned firms by the end of 2012, Cheong Wa Dae announced Friday.
The downsizing will affect most large-sized public firms, including the Korea Gas Safety Corp., Korea Rail Network Authority, Korea Housing Management and the Korea Energy Management Corp.
President Lee Myung-bak will convene a meeting of economic officials as early as today to approve the plan, a presidential office spokesman said on condition of anonymity.
``A rigorous public sector downscaling will continue until 2012 to cut the payrolls of state firms and enhance their overall competitiveness to match those in advanced countries,'' the spokesman said. ``The firms will be forced to shed a total of 35,000 of 259,000 jobs and sell their assets to the private sector. We've already informed the targeted firms of the job reduction plan.''
Under the guideline, each firm on the list will hold a board of directors meeting this month to initiate job cuts. The firms will also discuss ``job-sharing'' measures, which call for slashing starting salaries for college graduates by up to 30 percent to provide more job opportunities and, at the same time, avoid layoffs.
The move is expected to help narrow the salary gap between public and private companies, which usually make it tough for smaller firms to recruit workers as job seekers rush to positions with higher incomes and better job security in the public sector. The average salary of rookies in the public sector stood at 2.93 million won last year, 1.2 times higher than those of their counterparts in private firms.
Public firms will also be forced to streamline management.
``Reduction will be made for executives and senior officials, who account for 30-40 percent of the payroll at many public firms,'' a Cheong Wa Dae official said.
Building a slimmer government and streamlining public firms was one of President Lee's top priorities.
The initiative also involves privatizing public entities and combining or closing agencies. Over 50 state-run enterprises face privatization, including the Korea Development Bank, Incheon International Airport Corp. and the Korea Power Engineering Company.
An increasing number of private firms have joined the campaign to create jobs through wage reductions as part of efforts to tide over the economic crisis.
In February, a four-party panel representing civic groups, labor, management and the government agreed on a compromise to ``share the pain'' to help save jobs and expand social safety networks for the unemployed and low-income families. Under the accord, employers will refrain from laying employees off, unions will accept wage freezes ― or even reductions ― and the government will provide tax breaks to companies.
Since then, the country's top conglomerates, such as Samsung, LG and Hanwha, and major banks have cut or frozen the pay of executives and employees.