Telecom firm accepts over 8,000 voluntary redundancy applications
Published : 2014-04-22 20:58
Updated : 2014-04-22 20:58
KT, Korea’s second-largest mobile carrier by subscriptions, said Tuesday it has accepted more than 8,000 applicants for a voluntary redundancy program and would lay off the employees by the end of this month.
KT said in an official statement that the latest voluntary retirement plan would likely save the company 700 billion won ($672.8 million) in labor costs annually.
However, critics are warning KT against complacency, as the effects may be short-lived.
“Effects from restructuring plans usually last just a year or two. Therefore, KT must revitalize both its mobile and fixed-line businesses as long-term strategies,” said Choi Nam-kon, an analyst at Tong Yang Securities.
The mobile carrier started receiving applications for the voluntary retirement program in April 10. The application process ended Monday, earlier than the initial deadline on Thursday, as more people than expected had applied for the program.
The company will finalize the details of the restructuring process at a personnel committee meeting Wednesday.
Of KT’s 32,188 employees, 8,320, or 26 percent of the entire workforce, applied for the retirement program.
The number of the retirees is set to be the largest ever since KT was established in 1981.
The company reportedly laid off around 6,000 in 2009, 5,500 in 2003, 3,700 in 1999 and 5,200 in 1998.
Those who had worked for more than 15 years at the company were subject to this year’s restructuring.
According to the firm, 69 percent of the applicants are 50 or older, and the rest are in their 40s.
Those who work at landline phone service teams will likely be most affected as the fixed-line phone business has been on the decline due to the advent of mobile phones, according to industry sources.
KT gave some retirement-package options for the outgoing workers including reemployment at the firm’s affiliates including KT M&S and KTIS over the next two years.
The firm will provide consulting programs for those who want to start their own business or to try to get a new job.
The latest retirement plan is in line with renovation efforts by KT CEO Hwang Chang-gyu.
The KT CEO, who led Samsung Electronics’ semiconductor unit from 2004 to 2008, took the helm of the telecom firm in January after his predecessor stepped down for alleged embezzlement and breach of trust.
The mobile carrier posted 23.8 trillion won in sales in 2013, down 0.2 percent from 2012, and a net loss of 60 billion won, according to a regulatory filing.