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Cold Wave of Lay-off in Companies

Posted February. 20, 2004 22:30,   


As diverse governmental policies related to the “creation of job openings” have been introduced, the actual companies are striving to be first in carrying out the honorary retirement system.

In accordance with this, many experts have pointed out that the plan of government, which aims at expanding the job market by going through the “social agreement,” requires labor industry, companies, and government to participate together. The government expects the plan will not be easily accepted by private companies, which is the main body of employment.

Government endeavors to expand the job market, and companies attract people to retire-

The financial world suffers from the large scale sweeping reduction of personnel after the “card situation.”

The Korea Exchange Bank Credit Service which will be merged with the Korea Exchange Bank received the application of honorary retirement. Even Samsung Card which is evaluated as facing a relatively favorable situation, is trying to expand its range of honorary retirement to all employees with more than four years experience with the company.

The financial world expects that only in three card companies such as Korea Exchange, LG, and Samsung, which are scheduled to be restructured in near future, that approximately 2,000 employees will be reduced.

Among the commercial banks, Kookmin Bank has laid off 450 personnel in the last month. Among these employees, 172 normal bank clerks were included.

In recent times, even the companies which are evaluated as having stable employment status, carry out the regular honorary retirement system.

Nonghyup has decreased the age limit of honorary retirement from the existing 40 years to 35 years plus. Additionally, they have decided to include employees under 35 to apply for the honorary retirement in the case of those under the position of the department heads, stirring an early full-scale retirement of those in their thirties.

There is not an exception for the “prospering” companies. KT has carried out the “special honorary retirement” targeting 5,500 personnel since last October.

One of the major companies in the logistics field, the Hyundai Department Store has recently received the application for honorary retirement from normal personnel under the class of team managers. This company had already conducted the retirement system last December, allowing 60 employees to get laid off.

One out of four retired employees in their thirties went through the honorary retirement process –

Nowadays, the characteristics of honorary retirement can be referred as the decrease of the target age and class of position in the company. In accordance with the “tendency of employment insurance” released by the Korea Labor Institute, 25.6 percent of retired employees in their thirties were laid off from their companies based on reasons such as recommendations, company’s private reasons, and age limit.

In addition, results from a survey issued to the 1,558 manufacturing companies at the end of 2003 indicated one out of ten companies indicated the need for recruitment.

According to this, many experts point out that the intention of government to create job openings by the method of recommending certain companies will be of no avail in reality.

In particular, considering the ratio of the constituents’ allotment among the total amount of labor expenditures which has been increased from 9.7 percent in 1985 to 29.6 percent in 2001, the intention of government which aims at expanding the level of employment by granting taxation benefits is assessed as useless.

“Although the social concurrence is important, I am inconvenienced by the lack of a concrete measure that can clearly select the job categories which need fresh recruits,” remarked Hong Ki-tack, a professor of Chungang University.