Layoffs at Samsung pick up pace

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Layoffs at Samsung pick up pace

Samsung Group, a main driver of the Korean economy, is shedding workers.

Some 2,800 employees, or 5.1 percent of the entire staff at five major Samsung affiliates, were slashed in the first quarter after the country’s top business group accepted applications for voluntary retirements with severance packages.

More than 2,000 additional workers will leave by the end of this month.

The five affiliates - Samsung SDI, Samsung Electro-Mechanics, Samsung Heavy Industries, Samsung Engineering and Samsung C&T - had 54,988 employees including workers on short-term contracts at the end of last year, according to their business reports. That figure slumped to 52,168 as of the end of March.

At Samsung C&T, which is suffering from weakness in the construction industry, 610 workers left in the first three months of this year.

Samsung Engineering, which had an operating loss of over 1 trillion won last year, also let go of 520 workers.

Samsung Heavy Industries announced on Wednesday that it would shed 1,500 workers through voluntary retirement by the year’s end. Its long-term goal is to trim up to 40 percent of the total employees by 2018 to below 9,000 from 15,000.

One of Korea’s top three shipbuilders, Samsung Heavy Industries is laying off executives and accepting voluntary retirements due to the depression in the shipbuilding industry.

This is the first time it has come up with an actual number.

All 86 executives have submitted letters of resignation, a symbolic gesture in Korean corporate culture to show responsibility and determination. They also said they would receive only 70 percent of their monthly salaries starting in July and lasting until the company is turned around.

Non-executives will also have their paychecks trimmed. The higher the rank of the employees are, the larger the cuts. Even entry-level workers will see salaries reduced 10 percent.

CEO Park Dae-young explained in an internally broadcast video that the measures are part of a management turnaround plan endorsed by creditors led by the state-run Korea Development Bank.

Rumors swirled in the past week that Samsung SDS, an IT solutions and logistics unit, will also start a voluntary retirement program for executives, though a spokesman on Thursday dismissed the rumors as “groundless.”

“Many employees including myself have grown immensely nervous about our job status because we have no idea what kind of blueprint [Samsung Electronics vice chairman and heir-apparent] Lee Jae-yong is drawing for Samsung’s future,” said a mid-level worker at Samsung SDS.

Samsung SDS last Monday confirmed speculations through a regulatory filing that it would spin off its logistics business, but it did not elaborate, giving birth to a host of rumors.

Samsung SDS is known to be in the middle of figuring out the method and timing of the restructuring.

“The spinoff will take a path that minimizes damage to shareholder value,” Kim Min-shik, head of the company’s financial management team, told angry minority shareholders who visited the company last week.

Samsung Group last year hired a combined 14,000 entry-level workers fresh out of college and 4,500 in the first half this year. It’s unclear whether the group will recruit a similar number of new employees in the second half.

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