One in 4 companies in South Korea has implemented or is planning restructuring measures this year due to financial difficulties stemming from the prolonged COVID-19 pandemic, data showed Thursday.
According to a survey of 437 companies carried out by local job search platform Saramin, 27.2 percent of the respondents said they had conducted layoffs or planned to do so.
The most common reason given for restructuring was “the worsening business situation due to COVID-19” (69.7 percent, multiple responses), followed by “to reduce labor costs” (68.9 percent). Respondents also cited “increased fixed costs” (37.8 percent), “surplus manpower” (16.8 percent), “scheduled merger and business reshuffle” (4.2 percent), “to inject tension into the organization” (4.2 percent) and “to prepare conditions for new hiring” (4.2 percent) as reasons for laying off workers.
The food, beverage and restaurant industry, which was hit the hardest by the COVID-19 crisis, had the highest rate of layoffs at 57.9 percent. This was followed by shipbuilding and heavy industries (44.4 percent), distribution and trade (33.3 percent), and service (32.1 percent).
The average target for restructuring was 19.6 percent of all employees.
The most common ways of cutting jobs were recommendation (72.3 percent, multiple responses), followed by voluntary retirement or honorary retirement (30.3 percent) and layoffs (11.8 percent).
Of the companies that did not carry out restructuring, some asked employees to take paid or unpaid leave. Twenty-three percent of the respondents said they had asked or planned to ask staff members to take leave. In those cases, 52.9 percent offered paid leave and 47.1 percent imposed unpaid leave.
Sixty-four percent of the companies said they were burdened with labor costs due to the pandemic.
To reduce labor costs, companies were planning to “stop hiring new employees” (42.1 percent, multiple responses), impose “wage cuts or freezes” (42.1 percent), “implement no overtime work measures” (20 percent), “stop paying incentives” (18.6 percent) and “arrange work rotations” (11.8 percent).
By Shin Ji-hye (email@example.com