Pandemic pushes public companies to pass on new hires

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Pandemic pushes public companies to pass on new hires

Public companies are hiring less, due to pandemic-driven profit losses and rising labor expenses.
A state-owned enterprise is considered a dream company by many job seekers in Korea because a position at public companies often comes with stable income and a less stressful working environment compared to private corporations.  
However, state-run companies are becoming further out of reach as they have cut down on the number of new hires by half over the past two years, while members of standing committees doubled during the same period.
A report published on Feb. 8 by business analysis agency Leaders Index found that the number of new hires at 35 state-run companies totaled 5,917 last year, down 47.3 percent from 11,238 in 2019. Two thirds of the companies reduced hiring volume.
The fall was especially steep in the leisure industry, which has been hit the hardest by the Covid-19 pandemic.
The Korea Racing Authority, which oversees the racehorse industry, hired 41 regular employees in 2019, but the number dropped to one in 2020 after the outbreak of the pandemic. Last year, the company didn’t hire any regular employees at all. The number of new irregular workers — part-time and contract workers — also dropped by nearly 80 percent to 98 from 480 in 2019.
Kangwon Land, the operator of the only casino open for Koreans in country, hired three regular workers in 2021, though the number was 154 in 2019. State-run casino operator Grand Korea Leisure, which had 58 new hires in 2019, also hired only three permanent workers last year.
The Land and Housing Corp. cut down the number of new hires over the past few years as well, from 664 in 2019, 360 in 2020 to 17 in 2021.
The decline in jobs is attributed to the profit slump driven by the Covid-19 pandemic.
Some experts argue that the government’s policy to convert irregular employees to permanent positions backfired, as companies struggled to make up for rising labor expenses.
Korea Electric Power, which aggressively implemented the no-irregular-worker policy in hiring, had 1,047 new hires last year, a 40.9 percent drop from 2019. The Korea Railroad Corporation also hired only 1,426 regular employees, a third of 3,964 in 2019.
“Public companies couldn’t afford the hiring costs as their performances had gotten worse while labor expenses went up under the Moon Jae-in administration,” said Kim Tae-gi, an emeritus professor of economics at Dankook University.
Kim pointed out that the policy had a serious side effect — while existing employees benefitted from the policy, young people lost job opportunities.
“The government failed to take the contention between the employees and rising labor costs into consideration,” said Kim.
The government, however, countered that the policy is not the reason behind the decline in new hires.
“Converting the irregular workers into permanent positions is a change in employment status of an existing worker,” said a spokesperson for the Ministry of Economy and Finance.
“Changing the employment status does not impact the hiring of new regular employees.”
While new hiring nearly halved, the number of standing committee members at public companies doubled in the same period, from 45 in 2019 to 91 in 2021. Analysts explained that the pro-government members rushed to join companies to secure the two- to three-year membership at standing committees before President Moon Jae-in’s term of office expires in May.

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