By Lee Hyo-sik
A growing number of major companies are slashing employee wages, dismissing older workers and refraining from hiring new ones in the face of unfavorable business conditions at home and abroad.
The ongoing global economic downturn has forced shipbuilding, shipping and other underperforming industries to downsize their workforces and take other radical steps to reduce labor costs, unnerving many workers who are jittery about their job security.
Electronics, carmakers and other industries, which have fared relatively well, have also reduced the number of executives and have frozen workers’ salaries.
Many employees say things are as bad as when Korea was struck by the 2008 global financial crisis, adding that their job security has hit bottom as employers increasingly look to save costs by dismissing workers.
Among others, domestic shipbuilders, who lost billions of dollars over the past two years, have been at the center of the ongoing corporate downsizing drive.
Korea’s three major shipbuilders — Hyundai Heavy Industries, Daewoo Shipbuilding and Marine Engineering, and Samsung Heavy Industries — have been cutting manpower through a voluntary retirement program as they incur huge losses due mainly to construction delays in offshore plant projects. They also face greater difficulties in securing new orders because of stiffer competition from Chinese rivals.
Shipbuilders forced CEOs and senior executives to return their wages and imposed drastic cost-saving measures on employees.
“All three shipbuilders will certainly lose money this year,” said a senior manager at one of them, who declined to be named. “Things are actually worse for us than when the Asian currency crisis hit the nation in 1997. Everybody is desperate and is doing everything they can to survive.”
Similarly, steelmakers, builders and other struggling heavy industries have been trying to cut their manpower and introduce radical measures to slash labor expenses.
Furthermore, electronics, automobiles and other sectors, which have performed relatively well, have joined in the increasingly prevalent downsizing.
Last week, Samsung Group promoted 294 executives, fewer than last year’s 353. More than 400 were forced to retire early.
LG Group also reduced the number of promoted executives by 10 percent, while Hanwha and other family-controlled conglomerates decided to maintain the smaller pool of senior employees to save labor costs.
Hyundai Motor Group, which is yet to conduct its year-end personnel reshuffle, is widely expected to promote a few executives later this month.
“Companies have no other choice but to take all possible measures to stay competitive. One of the measures is to downsize their manpower,” said an executive at the Korea Chamber of Commerce and Industry (KCCI). “Korean manufacturers enjoyed robust growth in the past. But things have changed unfavorably for them amid the prolonged global economic slump.”
Rapidly rising Chinese companies are posing an increasingly grave threat to Korea Inc., the executive said, adding that companies based in the United States, Europe and Japan have regained their competitive edge, making it difficult for local firms to conduct business abroad.
“The ongoing downsizing shows how desperate local businesses have become to remain in the game. I think this is what every enterprise has to undergo for a turnaround,” he said.