Korean companies cut costs amid sluggish economy

[Photo by MK DB]

Major companies in South Korea are cutting back on expenditures amid the prolonged sluggish economy, such as by curtailing business trips and limiting corporate card spending.

Maeil Business Newspaper has learned that major conglomerates, including Samsung, SK, and POSCO, are tightening their belts.

They are urging executives and other senior members to minimize spending by drastically reducing staff perks and even downgrading their seat class on business trips.

Samsung Electronics Co., for example, used to provide vice presidents with Genesis G90s. However, the company downgraded the car class to the lower G80s last year.

The company’s Networks Division now sends executives in economy class on a plane instead of business class for business trips.

SK Group has also turned to cost-cutting measures. Its divisions strive to reduce costs by cutting back on company dinners.

In a major restructuring, LG Display Co. has recently offered voluntary retirement even to its staff in their 20s and 30s.

The company is also accepting voluntary retirement from its staff at Gumi and Paju plants, particularly from production workers who are at least 28 years old and have at least three years of service.

The cost-cutting measures have become increasingly common across domestic companies.

With new car sales declining due to a lack of new buyers, some car importers are cutting costs by reducing the number of dealerships at the core of their sales network.

Oil refining and petrochemical industries have also responded to the economic downturn and oversupply from China.

HD Hyundai Oilbank Co. has decided to put in place a six-day work week for its executives starting July 1 and has restructured its workforce in divisions with poor sales.