KT to Eliminate 5,992 Jobs, Reduce 16% of Workforce (Update2)
Note:This is in South Korea
By Kevin Cho
Dec. 28 (Bloomberg) -- KT Corp. will cut almost 6,000 jobs at the end of the year in its biggest-ever workforce reduction, a move that will save South Korea’s largest phone and Internet company 460 billion won ($393 million) a year.
The layoffs will apply to 5,992 employees who applied for early having worked at KT for more than 15 years, the Seongnam, Korea-based company said in a statement today. It’s the biggest reduction for KT in an early retirement program, exceeding 5,500 jobs axed in 2003. The compensation package will cost KT about 840 billion won in its fourth-quarter results, spokesman Lee In Won said by telephone.
Applicants for early severance beat expectations and will allow KT to cut costs to offset a drop in fixed-line telephone revenue, which slumped 6.3 percent in the third quarter as subscribers declined 10 percent. That could save more than the 500 billion won over five years anticipated from the merger with its mobile-phone unit this year, said Shim Jun Bo, analyst at HI Investment & Securities Co.
“It was much larger than expected, but it’s definitely good for KT because of the company’s heavy labor cost structure,” Shim said today. Mirae Asset Securities Co. predicted 3,700 jobs would go while Daewoo Securities Co. projected about 4,000.
Staff were asked to apply for early retirement by Dec. 24. The cuts will become effective Dec. 31, KT said. The company’s labor union said Dec. 9 it asked for an early retirement program to help support employees who wanted “new opportunities.”
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