Kakao Entertainment takes labor restructuring step, encourages job moves

[Photo by Park Hyung-ki]

The information technology (IT) valley in Pangyo, Gyeonggi Province, is being splashed with restructuring moves as South Korean tech companies realign businesses to improve profitability and reduce costs amid the growing uncertainty in the global economy.

According to multiple sources from the technology industry on Tuesday, Kakao Entertainment Co, a content unit of Korea‘s mobile platform giant Kakao Corp., has introduced a labor restructuring program for positions at senior levels with more than 10 years of service.

The program, dubbed Next Chapter, is an initiative that supports job switches and transfers for its workers. The workers, however, believe that the program is a voluntary layoff.

Kakao Entertainment said it will grant 5 million won ($3,930) of supportive incentives and salaries of up to 15 months to the employees taking part in the initiative. It will also offer severance pay based on years of service.

The total amount comes at tens of millions of won, which is relatively smaller than the average amount of hundreds of millions of won paid by financial institutions.

Industry insiders see the initiative as part of the company’s cost reduction efforts, following the acquisition of SM Entertainment Co.

“The latest restructuring program is voluntary,” said a senior-level official from Kakao Entertainment. “Those eligible for the initiative are weighing their options to choose the best.”

Tech industry insiders said that the restructuring program by Kakao Entertainment could trigger other tech firms to take similar steps.