Major Corporations Also Implement Wage Cuts One After Another Due to COVID-19 Impact

Hyundai Motor Group Executives Voluntarily Return 20% of Salaries
Lotte Group Executives Also Return Wages for 3 Months
Measures to Prepare for Prolonged COVID-19 Impact
Self-Help Plan to Maximize Short-Term Liquidity 확보

[Asia Economy reporters Su-yeon Woo and Yoon-joo Hwang] As the impact of the novel coronavirus infection (COVID-19) shakes industries across the board, even large corporations have lined up to voluntarily return part of their salaries. Companies plan to secure maximum liquidity by cutting labor costs, their last line of defense, as sales plummet due to COVID-19, aiming to overcome the prolonged crisis.

According to the business community on the 21st, from this month, executives of major domestic conglomerates directly hit by COVID-19, including those in the automobile, aviation, distribution, and heavy industries sectors, have decided to return 20-50% of their salaries. From the heads of conglomerates to executives, the management is taking the lead to demonstrate their commitment to emergency management.

First, in the automobile industry facing an export cliff, 1,200 executives from 51 Hyundai Motor Group affiliates, including Vice Chairman Chung Eui-sun, have voluntarily decided to return 20% of their salaries. Hyundai Motor Group executives returning part of their salaries is the first time since the global financial crisis in 2009 and the 2016 Terminal High Altitude Area Defense (THAAD) incident. Considering that the proportion of wages returned by executives this time due to COVID-19 is double that during the financial crisis (10%), it shows how seriously the entire group is taking the current situation.

Hyundai Kia Motors Yangjae Headquarters

In the distribution sector, affected by reduced consumption in hotels and department stores, Lotte Group Chairman Shin Dong-bin and executives of Lotte Holdings have also decided to voluntarily return part of their salaries for three months from this month through June. Chairman Shin will return 50% of his salary, while executives and outside directors of Lotte Holdings and executives of Lotte Shopping will return 20%. A Lotte Holdings official said, "Since the company is going through great difficulties, Chairman Shin and the executives made this decision to share the pain."

The aviation industry, where international flights have been virtually suspended due to COVID-19, has already begun reducing executive salaries. Korean Air decided that executives at the vice president level and above will return 50%, senior managing directors 40%, and managing directors 30% of their salaries, and implemented rotating leave for all employees. Asiana Airlines, after declaring emergency management, had all executives submit collective resignations and decided that the president would return 100% of his salary, expanding the scope of salary returns among executives.

Heavy and chemical industries such as steel and heavy industries have also prepared self-rescue plans focusing on labor cost reductions. Doosan Group, which is drafting a high-intensity self-rescue plan across the entire group, decided that all group executives will return 30% of their salaries. Doosan Heavy Industries decided that vice president level and above, including Chairman Park Ji-won, will return 50%, senior managing directors 40%, and managing directors 30%. POSCO is reported to have encouraged the use of annual leave and prepared plans to reassign overtime workers at steel mills in preparation for the prolonged impact of COVID-19.

As salary cuts to secure cash flow are being pushed starting from executives of major domestic conglomerates, the ripple effect is expected to spread to small and medium-sized enterprises, which are their partners. Companies plan to secure as much liquidity as possible in the short term and overcome the waves of COVID-19. A business community official said, "Companies want to stockpile resources in preparation for uncertainty," adding, "Employees and executives voluntarily share their burdens by recognizing the seriousness of the situation."

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