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| Seen is Hyundai Oilbank's very low sulfur fuel oil facility in Seosan, South Chungcheong Province. The company recently announced it will cut 20 percent of salaries of their executives to find a breakthrough in its business slump caused by the coronavirus outbreak. / Courtesy of Hyundai Oilbank |
By Baek Byung-yeul
A growing number of companies are cutting back salaries of their executives as part of their efforts to cope with the worsening business environment as the COVID-19 pandemic continues, according to company officials Wednesday.
Numerous companies are suffering from growing uncertainties stemming from the pandemic but it is the airline and oil refining sectors bearing the brunt of it.
Hyundai Oilbank said their executives will take a 20 percent pay cut from April to help offset the slump in refining margins.
Refiners here have been struggling with a plunge in crude oil prices and weakening refining margins due to travel restrictions.
Top management of Asiana Airlines, the country's No.2 full-service carrier, is also increasingly cutting down their wages.
The carrier already suspended most of its flights on international routes due to stricter entry restrictions. It recently announced its executives will return 60 percent of their salaries and have all of its 10,500 employees take a 15-day period of unpaid leave in April.
Asiana Airlines added it will not carry passengers on its outbound flights from Incheon airport to Beijing from March 31 to April 25.
Top government officials including President Moon Jae-in have recently said they will return 30 percent of their monthly salary over the next four months to help fund a nationwide effort to fight the coronavirus.
It remains to be seen if the pay cut trend will also happen at other companies. The country's top conglomerates such as Samsung, Hyundai Motor, SK and LG said they have no plan to reduce salaries of their executives, but they noted they are paying keen attention to the changing business environment brought about by the virus.
While some firms and high-ranking government officials are returning part of their salaries to help share the burden of what is happening in the economy, officials from the private sector are more cautious to follow the trend because they see the strategy as less important than conducting other measures which focus on management recovery.
"It is pretty much acceptable for top government officials to return their salaries to demonstrate their effort to share the pain during these lean economic times prompted by the coronavirus outbreak. However, when it comes to private companies, things are different because the pay cut is not the last line of defense," said an industry official who refused to be named.
"Contrary to public organizations, private firms require a different logic. When their business managements are in tough times, companies should work on improving the efficiency of their working process and streamlining their investment plan to preserve the benefit of their investors. Cutting back salaries of employees doesn't guarantee enterprises will get out of the crisis," the official added.
