Even Large Corporations Raise the White Flag... Surge in White-Collar Unemployment

All Business Sectors Including Aviation, Distribution, and Automotive Face Successive Restructuring with Voluntary Retirement and Executive Resignations

Korean Air operated passenger planes carrying only cargo on the 15th due to route suspensions and reductions caused by COVID-19, aiming to reduce costs and support domestic import-export companies (Photo by Korean Air) [Image source=Yonhap News]

[Asia Economy Reporters Changhwan Lee, Hyesun Im, Jihui Kim, Gimin Lee] As the novel coronavirus infection (COVID-19) pandemic shows no signs of abating, the restructuring wave that began in the aviation industry is sweeping across all industrial sectors including distribution, automotive, heavy industry, and petrochemicals. Concerns are growing that thousands of white-collar unemployed workers will flood the streets as restructuring continues with voluntary retirement, unpaid leave, and executive resignations not only in small and medium-sized enterprises but also in large corporations.

According to the aviation industry on the 19th, most airlines are currently undergoing workforce restructuring. This is because most routes have been suspended due to COVID-19, effectively putting them in a state of business suspension. Korean Air is currently implementing unpaid leave for 250 cabin crew members and 220 foreign flight crew members. Following last year's restructuring that reduced the number of executives by 27% and voluntary retirement for employees aged 50 and over, the company is once again cutting labor costs. Asiana Airlines is also currently implementing unpaid leave for all 10,000 employees, with all employees taking turns on unpaid leave for 10 days each. Small and medium-sized airlines such as Jeju Air, Air Busan, Jin Air, and Eastar Jet have up to 50% of their employees on unpaid leave. The industry estimates that among the total 19,800 employees of the six airlines mentioned above, more than one-third are on leave.

The situation in the automotive industry is also dire. Mando has again introduced a voluntary retirement plan this year following last year. It is conducting voluntary retirement for about 2,000 production workers. Mando Chairman Mongwon Chung met with the labor union on this day to explain and seek understanding regarding the inevitability of restructuring measures such as voluntary retirement and partial business sales. During the meeting with the union, Chairman Chung expressed regret, stating that due to changes in the automotive industry and a decrease in domestic and overseas production volumes, idle manpower has emerged, making voluntary retirement unavoidable. He directly explained the company's management situation to the union opposing the restructuring and sought their understanding.

Renault Samsung Busan Plant (Photo by Yonhap News)

The distribution industry, which has been hit hard by the consumption decline caused by the COVID-19 pandemic, is also struggling. Lotte Shopping, which is restructuring 20% (about 200 stores) of its entire stores including department stores, marts, and supermarkets, is implementing workforce reductions accordingly. Lotte Hi-Mart is also conducting voluntary retirement for the first time in its 20 years since establishment. The target is employees aged 50 and over with more than 25 years of service, from assistant managers to department managers. About 80 employees meet the voluntary retirement conditions.

The heavy industry and petrochemical sectors are also in emergency mode. Doosan Heavy Industries accepted applications for honorary retirement from about 2,600 employees aged 45 and over, including technical and office workers, for two weeks from the 20th of last month to the 4th of this month. It is known that about 500 employees applied for retirement. Hyundai Rotem is also conducting voluntary retirement for managerial staff at the level of responsible manager and above. The number of executives has also been reduced by 20%.

OCI, the nation's top polysilicon producer, is accepting voluntary retirement applications from over 2,000 employees until the end of this month. S-Oil is also preparing a voluntary retirement plan targeting employees aged 50 and over for the first time since its establishment. The business community fears that if mid-sized and small enterprises, whose situations are not yet fully understood, are included, tens of thousands of unemployed people will emerge within a few months. Kim Muntae, head of the Economic Policy Team at the Korea Chamber of Commerce and Industry, emphasized, "Companies are inevitably reducing employment to cut costs, but to prevent this, the government must implement more active and expansive support policies. Also, tax measures that can foster new industries capable of creating jobs and increase investment are absolutely necessary."

This content was produced with the assistance of AI translation services.