Builders hit hardest; labor group cites relaxed rules on massive dismissals


More than a million workers lost their jobs last year as a result of restructuring, layoffs or bankruptcy amid a sluggish domestic economy, government data showed Thursday.

According to employment insurance statistics provided by the Labor Ministry, a total of 2.13 million workers exited the national employment insurance scheme due to involuntary termination of employment, accounting for nearly 40 percent of the total who had their insurance expire last year.

Of the 2.13 million, more than 1 million were forced to leave their jobs because of management difficulties.

Some 102,000 cited restructuring, layoffs and other managerial reasons as the reason for their dismissal, up nearly 30 percent from a year ago. It was the first time that the figure breached the 100,000 mark.

Corporate bankruptcies, business closures or termination of projects, cost another 216,000 others their jobs, posting a 5.6 percent rise from 2010.

Movements in employment insurance holders are considered a key barometer of the domestic job market and an indicator of overall economic conditions.

The number of involuntary jobless people tends to inch up during economic downturns.

Ministry officials also attributed the rise in the number of involuntary retirees to a slow recovery of the domestic economy, in particular in the construction sector.

The year 2011 was tough for local builders. Many collapsed under financial difficulties amid a prolonged slump in the property market.

According to the Korea Specialty Contractors Association, an association of local builders, some 3,637 construction firms in Korea went bankrupt or had their business shut down.

Labor groups, however, offered a different view on Thursday’s data.

Korean workers are particularly vulnerable to layoffs because the authorities relaxed rules after the 1997-98 financial crisis to allow employers to make massive dismissals without any imminent managerial difficulties, they claimed.

“Going through financial crises ― one in the late 1990s and another in the late 2000s ― employers have wielded the axe, although there was no justifiable reason,” said an official at the Korea Confederation of Trade Unions, an umbrella labor group.

Layoffs at Hanjin Heavy Industries & Construction Co. and an ensuing 11-month labor struggle was a major social and political issue last year. Its union and management struck a deal in November, which saw management agreeing to rehire all 94 laid-off workers within a year and provision of 20 million won each in compensation.

By Lee Sun-young (milaya@heraldcorp.com)