In the wake of the global financial crisis, financial institutions, manufacturers and service providers in the United States and Europe have started to slash their payrolls as part of corporate restructuring. In South Korea, quite a few corporations are also preparing mass layoffs.

Some domestic financial institutions are slashing their work forces, beginning with layoffs of nonregular workers. Automakers, which are planning to cut down on their production in the near future, are expected to encourage early retirement. One of the top 50 homebuilders has recently gone belly up, as many of its new apartments remain unsold. Mass layoffs are certain to follow when it goes into court receivership.

All these pieces of bad news are coming at a time when the nation's job creation capacity has been halved. In October, the working population increased by a mere 97,000 people on a year-on-year basis. At the outset of this year, the increase surpassed the 200,000 mark.

There is little likelihood that the labor market conditions will improve anytime soon. The government-funded Korea Development Institute predicts that growth in gross domestic product will slow to 3.3 percent next year and that, as a consequence, the increase in the working populations will hover around 100,000.

Against this backdrop, labor and management are going into an agreement on freezing wages at some corporations, which include Incheon International Airport Corp and KT. A pay freeze may look to be a huge concession from unions, which are accustomed to annual wage increases during the past boom years.

But unionized workers at certain corporations will have to agree to pay cuts if they wish to avert mass layoffs. The government will have to provide labor and management with full support when they engage in job-sharing negotiations. Such efforts are no less important than spending on the government's job-creation projects.

(China Daily via The Korea Herald/Asia News Network November 19, 2008)