KT starts big workforce cut

KT said Tuesday that it will cut the number of employees drastically under its new CEO Hwang Chang-gyu’s downsizing and cost-cutting initiatives.

The firm will conduct “voluntary” retirement programs for those who’ve worked 15 years or longer.

A KT official said the plan is “radical and unprecedented,” with the firm struggling to compete in the saturated domestic market.

“Without large-scale restructuring, KT can’t survive and overcome today’s crisis. KT needs more fresh blood. This is what CEO Hwang believes,” the company said in a statement.

Applications for the early retirement programs will be accepted from Thursday to April 24.

The program will affect 23,000 of KT’s 32,451 workers. Theoretically, up to 70 percent of workers could apply for retirement.

But this is unlikely to happen, according to officials.

“We estimate that some 8,000 or more will apply,” said a KT official.

Earlier, KT decided to introduce a “wage peak” system from January 2015. In addition, it plans to scrap various welfare programs and benefits for employees.

KT said it spent more than 2 trillion won on paying wages last year. If KT cuts its number of employees by 70 percent, it can save 1.47 trillion won, annually.

KT’s biggest local rival, SK Telecom, including SK Broadband, has 5,700 workers as of last year with total wages standing at 591 billion won.

The smallest local carrier, LG Uplus, spent 478 billion won to pay its 6,780 employees.

Those who have applied for the program will be given a chance to work at one of KT’s affiliates for two years. Workers who leave the company through this program will receive 170 million won in compensation on average, according to the company.

“With the money to be saved from this restructuring, KT will hire more young people. We need a big change,” said a company spokesman.

This is the largest restructuring since 2009, when around 6,000 workers left the firm.

A senior KT executive who has worked for the company for 23 years, told The Korea Times that he understands the decision by the new CEO as KT’s human resources are “unqualified and not ready” to accept changes.

“I decided to apply for the program. This is the first working place for me. But things have been changing. We need a generational change,” he said.

After completing the staff restructuring, KT will hand over some non-core businesses to affiliates in an effort to boost its profitability.

Hwang, who is a former president at Samsung, is reviewing all its businesses from a “zero-base,” including its big overseas projects in African countries such as the building of a fourth-generation network in Rwanda.

Hit by heavy mismanagement by former CEO Lee Suk-chae, KT reported an operating loss last year for the first time in history. Its net loss came to 300 billion won for the last three months of 2013.

KT’s labor union expressed concerns about the announcement. “Hwang treats employees as targets to be restructured, not as a driving force,” the union said in a statement urging the management to completely wash out the debris of the former bribery-ridden CEO. By Kim Yoo-chul The korea times