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Half of Companies Cut or Froze Wages in Nov. & Dec.

Posted January. 08, 2009 05:07,   


More than half of Korea’s corporations either froze or cut wages in November and December last year, the Labor Ministry said yesterday.

This indicates that the economic crisis has spilled over to the real economy. If things deteriorate further, the number of companies to freeze or cut wages is likely to increase.

The ministry said that of 5,667 companies with more than 100 employees agreeing on wage agreements with unions, 774 (13.7 percent) either cut or froze wages.

Among them, 51 percent did so in November (85 companies) and December (310).

In the first six months of last year, a monthly average of 20 corporations froze or cut wages. The number steadily rose to 48 companies in July, 65 in August and 75 in September.

Amid the economic downturn, however, the share of companies that reached wage agreements with unions reached 84 percent last year, up from 76.5 percent in 2007.

Lee Chae-pil, head of the ministry`s labor-management policy cooperation bureau, said, “The number of companies agreeing with labor on no strikes, pay freezes and delegation of rights to negotiate wages to management reached 2,678, more than threefold from 749 in 2007.”

Given the peaceful mood in workplaces, the ministry said an increasing number of corporations will negotiate to win concessions from unions, such as pay cuts and wage freezes, though relations between management and labor will become unstable due to walkouts stemming from the economic crisis.