Mobile carriers raise severance pay to slim down workforce

KT headquarters in Seoul (Newsis)

Mobile carriers are strengthening their severance packages to encourage early retirement amid efforts to renew their business portfolio and restructure stagnant workforce.

Kicking off voluntary redundancy, KT Corp., the country's second-largest telecommunication company, recently raised the maximum severance pay for voluntary redundancy, from 330 million won ($238,000) to 430 million won.

Earlier this month, the mobile carrier decided to establish two new affiliates, KT OSP and KT P&M, to take charge of its network operation and management, and move the workforce in charge of the duties to the new entities.

To about 3,800 employees in charge of network operations, KT has offered three choices of moving to the new affiliates, staying at their current positions, or early retirement with the renewed severance package.

"The personnel restructuring is aimed at creating a flexible and efficient work environment. We are offering multiple options to the employees and good compensation," a KT official said.

The company is also offering the voluntary exit benefits to employees who worked for more than 15 years, and receiving applications for voluntary retirement until Nov. 4.

Industry observers say KT's restructuring efforts would help the company to slim down the entity, and make room to hire a new workforce focused on emerging technologies, such as artificial intelligence and big data.

Compared to its competitors, KT has a particularly high number of employees. As of June 2024, KT had a total of 19,370 employees, including 753 contract workers, according to the company’s half-year report. SK Telecom, the country's largest wireless carrier, reported it has a total of 5,741 employees including 310 contract workers in its half-year report, while LG Uplus reported 10,695 workers including 226 contract workers.

"The average age of employees at telecommunication firms tends to be higher when compared to other industries, due to the stable nature of the business, which is largely centered around mobile subscriptions," an industry official said.

SKT runs a volunteer retirement program dubbed Next Career. The company recently raised severance pay for employees over 50 years old, from the original 50 million won to up to 300 million won.

SKT said the measure is aimed at "providing active support" for departing employees.

LG Uplus also carried out voluntary redundancy in 2022 for employees who served over 10 years in the company and were over 50 years old.

By Jo He-rim(herim@heraldcorp.com)