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By Park Jae-hyuk
Samsung C&T, Daelim Industrial, Daewoo E&C and GS E&C have begun workforce reductions amid growing uncertainties about the construction market in 2019, according to industry officials Thursday.
The four ― out of the five largest construction firms here ― expect the market will continue to be stagnant next year, due to decreasing investment in social overhead capital projects and government regulations on the housing market. This is in addition to plunging overseas construction orders caused by a drop in oil prices.
Samsung C&T recently accepted applications for voluntary retirement from employees who have worked for the company for more than four years.
The company said it will give each retiree up to 90 million won ($80,000) in addition to mandated retirement payments.
Over the past two years, Samsung C&T has been carrying out restructuring.
It reduced the number of employees to 5,596 in the first half of this year from 7,962 in 2015.
The reduction followed the falling number of orders for apartment complexes here, and industrial plants overseas.
Samsung C&T said it will continue the restructuring, although it may not accept applications for voluntary retirement in 2019.
Daelim Industrial also began accepting voluntary retirement applications this month.
Due to the sluggish overseas construction orders, it had already reduced the number of its employees to 7,255 in the third quarter of this year from 7,619 at the end of 2018.
The company is reportedly considering extending the unpaid leave of workers at its plant business division.
The workers have been on unpaid leave of absence since March.
Daewoo E&C, which failed to find a new owner after Hoban Construction dropped its bid to acquire the company, is also pushing to reduce its workforce, although it has already decreased the number of employees by 400 this year.
Since October, employees in the plant business division have been given a two month leave of absence.
More than 1,000 workers have had two-month breaks in rotation, without getting any additional bonuses except their basic wages.
GS E&C has transferred its idle manpower from its plant division to the housing division for efficient human resource management.
Hyundai E&C, which has been rumored to be sending its employees home, has denied this.
Industry officials said Korean builders will carry out large-scale restructuring again next year, unless their situation improves.
According to the International Contractors Association of Korea, the value of overseas construction orders is again unlikely to exceed $30 billion this year, considering that Korean firms collectively received $26.6 billion in orders as of Monday.
The amount of overseas construction orders has been below $30 billion since it dropped to $28.2 in 2016 from $46.1 billion in 2015.
"Korean builders are inferior to those in China and India in terms of cost effectiveness," a construction industry official said. "Moreover, they are now falling behind Chinese firms in terms of technical skills."
