Doosan unit sheds young workers

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Doosan unit sheds young workers

Doosan Infracore, a machinery subsidiary of Doosan Group that has been slashing its workforce this year, came under fire for offering buyouts to workers in their 20s and early 30s, including staff who have worked less than half a year.

As news of Doosan Infracore’s fourth round of layoffs spread via media outlets and social media Tuesday evening, Doosan Group Chairman Park Yong-maan rushed to do damage control Wednesday morning, ordering the affiliate to scrap the plan.

Park also chairs the Korea Chamber of Commerce & Industry, a top business lobbying group.

“I ordered the affiliate to provide methods to protect newly hired workers from the restructuring,” Park told reporters on Wednesday. “I heard from my staff that the company needs to carry out a voluntary resignation program as the construction machinery industry is in an unexpected slump, but I ordered them not to include new workers.”

Asked which workers will be recognized as new, Park said, “Workers hired one to two years ago, I think, but it’s inappropriate to give specific numbers now because [decision makers] at the affiliate might take my words as specific guidelines.”

The company started accepting voluntary resignations starting Dec. 8 from all 3,000 administrative workers. Criticism quickly mounted at news that they included a 23-year-old contract-based female worker and another worker who joined the company in July. From its three previous voluntary resignation programs carried out in February, September and November, a total of 830 engineers and production workers left the company.

Doosan Infracore has been saying it is essential to improve its profit and loss statement. For the first three quarters of this year, the company reported a 20.8 billion won ($17.7 million) operating loss compared to last year’s 98.7 billion won operating profit, mainly due to the costly acquisition of U.S. heavy equipment maker Bobcat Equipment & Attachments in 2007 and a slumping economy in China.

“It was unavoidable to call for voluntary resignations from young workers since many older and higher-ranking position employees already left the company through a retirement program,” a spokesman of Doosan Infracore said.

The public was outraged because the move was the reverse of some applauded actions in the recent past.

In August, Doosan Group said it would implement the so-called peak wage system in all of its affiliates starting next year, claiming that would save it money and wages and allow it to hire more young, unemployed people. In the peak wage system, older workers’ salaries plateau or decline as they approach retirement age, making way for younger hires.

Doosan Infracore adopted the system last year and said it was able to hire 358 new employees, double the amount in 2013.

Including young workers in layoffs is very rare. The last time it was seen was in the late 1990s Asian economic crisis.

Doosan Group had a relatively positive reputation with the young generation thanks to TV commercials with the slogan “Human is the future,” which highlighted its culture of caring about the young generation. Chairman Park wrote the slogan himself.

After the news started spreading, some Doosan workers started telling stories about how the company has been forcing young workers to quit. Criticism is rising of Doosan Group’s recent reshuffle, which included promoting the chairman’s eldest son, Park Seo-won, a 36-year-old vice president of the conglomerate’s advertising unit Oricom, to senior managing director at a new duty-free shop operation.

“My boss called me several times this morning and pressured me to voluntarily resign - while the TV news was saying the chairman ordered the company to protect newly hired workers,” said a 30-year-old Doosan Infracore employee surnamed Yoon. “Since this is my third year working here, I don’t think I will be rescued.”

Doosan is not alone in the brutal downsizing. Shipbuilders like STX Offshore & Shipbuilding offered buyouts to all workers, including employees in their 20s and 30s, through Dec. 11. It aims to cut 700 to 800 workers, about 30 percent of its workforce.

Even Samsung Group received about 5,700 voluntary resignations at 13 affiliates, including Samsung Electronics, in the last year.

“The government demanded companies seriously restructure themselves instead of helping them,” said Kim Seung-taek, a researcher at the Korea Labor Institute.

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