Office workers head home for the day in central Seoul. (Yonhap)
SEOUL, Feb. 27 (Korea Bizwire) — South Korean companies are engaging in preventive restructuring to offset the economic impact from the coronavirus outbreak.
Even conglomerates, traditionally strong employers offering quality recruitment opportunities, are announcing a series of restructuring plans, adding to the fear already rampant in the labor market.
Doosan Heavy Industries & Construction Co., a leading desalination plant builder, announced plans to carry out a voluntary retirement program for staff over 45 years of age, starting February 20.
The measure comes for the first time in five years, and is targeting as many as 2,600 employees.
S-Oil Corp., a major oil refiner operating in South Korea, is also planning a voluntary retirement program for the first time since establishment in 1976, targeting employees over 50 years of age.
“Current operating profits stand at a mere 30 percent of what the company earned in 2016, and we are trying to cut costs,” said an oil industry source.
“All of us are being swept over by the need to restructure.”
OCI Company Ltd., South Korea’s largest manufacturer of polysilicon, a crucial component in solar panels, shut down domestic production last Thursday, and layoffs are inevitable.
Corning Precision Materials Co., an LCD manufacturer, also began receiving registrations for voluntary retirement after the company’s operating profit plunged by 50 percent.
Petrochemical industrial complex in Ulsan. (Yonhap)
“Companies in various fields including power generation, oil, energy and display manufacturing are going through restructuring. This means that the value chain has crashed,” said Prof. Kim Ki-chan from the Catholic University of Korea.
“This is an emergency economic situation, and we don’t even know where to begin.”
Industry officials say that additional layoffs may occur in other business fields if the outbreak situation persists.
The retail industry is anticipating layoffs of thousands due to the coronavirus outbreak.
The airline industry, while currently coping with unpaid leaves of absence and wage cuts, may also resort to restructuring if the situation continues.
“Restructuring comes as a last resort for businesses in extreme situations,” said a source familiar with financial markets.
“The recent series of restructuring plans reflects the fact that companies, even without the coronavirus crisis, have been struggling with a long-term economic decline.”
H. M. Kang (hmkang@koreabizwire.com)
