Nothing voluntary about it
Doosan Infracore’s interview with candidates for early retirement lasted about one minute - no more than Doosan Group’s TV commercials that featured a very successful corporate catchphrase, “Human is the Future.” Doosan Group prompted a public uproar by offering buyouts to novice employees in their 20s who had just started working at the company, women employees on maternity leave and young workers who had just joined the permanent payroll after working on two-year contracts. The early retirement that used to be taken by workers nearing their retirement is now called voluntary retirement.
Doosan Group Chairman Park Young-maan ordered the early retirement program to leave out employees who had been with the company for less than two years. But people in their early 30s who worked at the company for three to five years were pushed out of the door. They included newlyweds and new parents. The company dismantled one entire business division. Doosan clearly had little respect or appreciation of its employees.
Doosan carried out a voluntary retirement scheme in its affiliates over the last two years. Doosan Infracore implemented four rounds of voluntary retirements this year alone, shedding staff of over 1,500. What has made the company so merciless? What was the cause of its business losses? How much were the layoffs necessary for its viability? The group fails to answer any of these questions.
Doosan Infracore ran into liquidity woes after a slump in the domestic and overseas construction markets and its 2007 acquisition of U.S.-based compact loader and construction-equipment maker Bobcat. The company has been paying 6 percent in interest on its loan of $3.9 billion to buy the U.S. company. The company will have to start repaying the principal from next year. The acquisition has cost the company its key industrial machinery division, and the company’s sustainability is being questioned.
Despite deteriorating conditions, the company’s executives turned a blind eye. Although the company has been making operation profits, it incurred massive losses because of interest payments. Still the company continued to pay its holding company Doosan Corporation dividends higher than the net profit ratio. Even as the company was in a dire financial squeeze, it has been building the wealth of the family that controls the group.
Who were the targets for redundancy? They were office staff and the manufacturing work force. The office staff was separated into two groups - graduates of four-year universities and two to three-year vocational colleges. Those who received redundancy notices were mostly people with the less impressive degrees. Those who weren’t fortunate enough to go to expensive cram schools and study at high-cost private universities got the axe.
Doosan had been named as a model company by the Ministry of Employment and Labor in June for increasing its new hires through the adoption of the so-called peak-wage system where older workers’ salaries plateau or decline as they approach retirement age to make way for younger hires. But of 358 new hires, 200 were recruited on a short-term contract basis. The executives blamed for bad management retained their jobs. Some of the offspring of executives are said to have been transferred to safer units. The company explained that the move of certain employees to other affiliates was made to reduce the scale of voluntary retirements. No kidding.
There is nothing voluntary about voluntary retirements. Those who refused to accept buyouts are said to have been forced to write reports ruminating on their flaws, or go on lengthy unpaid leave, or even be prevented from using restrooms freely. Is this truly limited to Doosan?
Translation by the Korea JoongAng Daily staff.
The author is a researcher at the Korea Labor & Society Institute.
by Kim Jong-jin