Outplacement gains ground at Korean start-ups

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Outplacement gains ground at Korean start-ups

Published: 14 Dec. 2022, 18:02

[SHUTTERSTOCK]

Start-ups cutting staff to survive the financial winter are helping those let go find new jobs.

The companies are establishing outplacement programs for former employees, in part to maintain relationships and keep contact in case business recovers and workers are quickly needed again.

One executive of a local IT start-up has been busy not only due to the downsizing of the company but also to help employees look for new jobs. Referring employees to other companies and going on recruitment sites are some of the agenda items of the day.

“Restructuring has become inevitable, but we are trying our best to take responsibility and look for new jobs for those who have worked so hard for the company,” the executive said. “We may meet again in the future, so it is also important to say goodbye in the best possible way.”

Start-ups aiming to cater to these start-ups are springing up.

One company is Wanted Lab, which started supporting services for companies that are working on management efficiency with programs to support ex-employees moving on to the next job.

Employees affected by the layoff will be supported to find their next job, and these services will also help recruiting companies to look at the CVs of the employees before any other candidates.

The idea of outplacement has been well developed in the United States where the employment market is much more flexible compared to Korea.

In Korea, the idea has been developed during the financial crisis in late 1998, mostly in large companies in order to minimize the conflict between the company and employees during restructuring.

Efforts to find jobs for former employees also help companies maintain their reputations, as they could meet the former employees again in the future.

Global tech companies have also been busy with outplacement efforts due to the global economic downturn.

Meta, the operator of Facebook and Instagram, is letting go 13 percent of its employees, totaling approximately 11,000, last month. Meta promised 16 weeks of pay, health insurance and career support as well.

CEO of Stripe, a fintech company, even put up a Twitter post asking anyone who would "like to hire any of the wonderful former Stripe employees who are leaving" to email the company.

Outplacement programs in Korea were mostly seen at large companies for senior retirements.

According to an amendment to the Enforcement Decree of the Act on Prohibition of Age Discrimination in Employment and Elderly Employment Promotion, a company with more than 1,000 employees needs to provide job training and support employment for employees 50 and above that worked at the company for at least one year.

Experts say that the outplacement measures are likely to increase not only in short term but also in long term, as the labor market grows keener on employees' rights.

“Companies in the United States have a separate team to support ex-employees,” said Kwon Soon-won, a business professor at the Sookmyung Women’s University. “There is a need to benchmark the idea of outplacement as it provides stability to departing employees as well as the remaining ones.”

BY YU SUNG-KUK [cho.jungwoo1@joongang.co.kr]