Nearly half of listed companies cut workforce in H1

Sep 14, 2021, 08:41 am

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Source: Korea Economic Research Institute (KERI)

AsiaToday reporter Hong Sun-mi

Nearly half of South Korea’s listed companies cut their workforce in the first half of the year in the aftermath of the coronavirus pandemic, a think tank said Monday. The fourth wave of COVID-19 infections, which started in earnest since July, has dampened hopes for expectations for an economic recovery, raising concerns that the employment shock will prolong.

In the January-June period, 859, or 47.3 percent, of 1,816 corporations listed on the country’s major and minor bourses cut the number of their employees compared to the same period of the previous year, according to a report released Monday by the Korea Economic Research Institute (KERI).

The drop in employee numbers was more severe among KOSPI-listed firms, which tend to be bigger in size than their counterparts on the tech-heavy KOSDAQ market.

While 48.4 percent of KOSPI-listed firms reduced the number of employees in the first half of the year, the figure for KOSDAQ-listed firms was 46.4 percent.

“If listed companies, which are thought to be in a better economic environment, have taken a hit in terms of employment, the situation for small and medium business owners must be more pessimistic,” the KERI said.

As a result of analyzing the number of listed companies with staff reductions over the past three years, the proportion of job-cutting listed companies was down in the first half of the year compared to the previous year on the back of expectations for an economic recovery and the improving situation of the pandemic. However, the figure has apparently not recovered to pre-pandemic level.

The proportion of job-cutting listed firms stood at 47.3 percent in the first half of the year, down from 51.4 percent a year earlier. But the proportion was higher than 43 percent recorded in 2019, just before the outbreak of COVID-19 in the country.

The combined workforce of those listed companies has been on the decline since 2019. As of the end of June this year, their total workforce came to 1.441 million, down from 1.453 million last year and 1.486 in 2019.

“Nearly half of firms have reduced the number of employees and the total number of employees at listed firms has been decreasing since 2019. As the economic prospect remains uncertain, the pandemic shock to employment might prolong,” the KERI said.

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Source: Korea Economic Research Institute (KERI)

On top of job cuts, 240 firms, or 13.2 percent of the total listed companies, suffered setbacks in sales and operating income.

The proportion of KOSDAQ-listed companies that experienced decrease in revenue, operating profit and number of employees in the first half of the year stood at 13.8 percent, higher than that of KOSPI-listed firms with 12.2 percent.

“Revenue, operating profit, and number of employees represent the potential, profitability and investment worthiness of a company. Listed firms’ triple woes could undermine the overall vitality of the South Korean economy,” the institute said.

“It is time for the government to make an all-out effort to support companies through policies such as easing regulations or improving employment flexibility so as to protect jobs and help them overcome the crisis,” said Choo Gwang-ho, head of the economic policy department at the KERI.

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