Fear of layoffs looms large

Unlike during the 1997-98 Asian financial crisis, Korean corporate and financial sectors have been striving to preserve jobs during the economic downturn. Under strong government pressure, Korean firms have been refraining from layoffs, cutting or freezing the pay of executives and workers instead.

But the acceleration of the economic slump is forcing an increasing number of firms to resort to massive reductions in staff in order to survive the crisis.

Most recently, Daewoo Bus Global Corp. said yesterday it notified its union of a plan to reduce 507 of its 1,316 employees, due to a decline in car sales.

WiniaMando, a major refrigerator and air conditioner maker, announced last week a plan to cut the number of full-time manufacturing workers by more than half to 220 from 456, the first large-scale job cut since the Asian financial crisis a decade ago.

HSBC Korea is the latest bank joining the financial industry`s move to encourage "honorary" or "early" retirements to cope with the severe downturn.

HSBC Korea yesterday said that it has decided to accept voluntary retirement applications from all workers until March 25. It is the first time the British banking giant`s Korean unit has allowed retirement requests from all 1,050 employees.

"Workers who applied for retirement can officially leave the company as of March 31," an HSBC Korea official said.

"If the number of retirees exceeds our earlier projection, we will hire new workers," the official said.

Other banks also have taken similar steps recently to reduce costs through voluntary restructuring. Woori Bank said on Friday it would raise the maximum number of applicants for "job change program" to 6,000 this year from 4,000 last year to reduce the overall size of the workforce. Under the program, the bank pays extra retirement benefits to workers leaving the bank to help them land another job quickly. A total of 90 Woori officials left the company through the program last year.

Besides HSBC Korea and Woori, banks reduced a total of 1,900 full-time jobs through similar voluntary retirement programs during the period of late last year and early this year. They include Kookmin Bank, Hana Bank, the Korea Exchange Bank, the Export-Import Bank of Korea, SC First Bank, Citibank Korea, Pusan Bank, Daegu Bank and the National Agricultural Cooperative Federation.

Growth of full-time jobs has significantly slowed over the past several months.

In July last year, the economy added 381,000 jobs, according to data compiled by the Labor Ministry. However, the number has continued to decline to 318,000 in September and dropped below 300,000 to 287,000 in January.

The nation shed 134,000 temporary jobs and 133,000 daily jobs in January.

"Full time workers will be relatively safer than temporary or daily workers from the recession because they can be better protected by labor unions," said Sohn Min-joong, research fellow at the Samsung Economic Research Institute.

"However, the number of newly added full-time jobs will decline further due to the accelerated downturn of the economy. The monthly addition may fall to as low as 10,000 levels," he said.

By Kim Yoon-mi



(yoonmi@heraldm.com)