[THE INVESTOR] SK Engineering and Construction, one of Korea’s top construction firms, recently decided to conduct layoffs to cut cost amid sluggish business conditions, according to multiple sources on Nov. 12.
“Although the company calls it a ‘voluntary retirement program,’ many SK E&C employees feel the pressure to quit,” an industry source briefed on the matter told The Investor.
The construction firm will offer an equivalent of a six-month salary as compensation. Assistant managers and those above will be largely affected by the ongoing layoff scheme.
The firm has been receiving applicants for the retirement program starting this month.
SK E&C, however, denied that it is conducting a layoff scheme, saying its overall business performance in the recent two years has been robust.
“SK E&C’s businesses, including the one for domestic construction, have posted the most upbeat earnings this year since 2000, and a hiring process for new employees is currently underway,” said a public relations representative, adding the entire number of staff has been reduced due to the sluggish global plant construction business in recent years.
The SK Group affiliate won bids for global constuction projects worth more than 5 trillion won ($4.47 billion) in 2014, but the figure has been steadily falling. In 2016, it tumbled 587 percent to 852.2 billion won.
In the second quarter of this year, the firm posted an operating profit of 47.4 billion won, down from 87 billion won in the second quarter of 2016. The company suffered from an operating loss in 2013, but swung back to black in 2014.
Building refineries in global markets, such as those in Southeast Asia and Middle East, account for 42.5 percent of SK E&C’s overall sales, while projects constructing apartments, commercial buildings and infrastructure take up 22.8 percent and 19.1 percent, respectively, according to the firm’s regulatory filing.
The latest layoff scheme is also a part of cross-board restructuring programs taking place at SK Group.
In July, e-commerce platform operator SK Planet sold its advertisement business unit to S.M. Entertainment, an entertainment giant.
Some 100 employees at SK Networks retired earlier this year after the company sold its liquefied petroleum gas business to its sister company SK Gas in 2016. SK Group also plans to sell SK Encar, a used car business, to a local private equity fund.
The series of cost-saving schemes, while necessary, appear to be raising concern among employees.
“Workers feel that the decisions are being made without considering the impact on their lives,” said one SK Group employee.
By Kim Young-won (email@example.com