Published December 26, 2012
SEOUL – South Korea's president-elect asked the leaders of the country's big businesses, or chaebol, on Wednesday to think twice before cutting jobs, saying it was time for the conglomerates her father helped build four decades ago to look beyond profits.
The election last week of Park Geun-hye, the 60-year-old daughter of former military ruler Park Chung-hee, was welcomed by the country's big businesses which dominate the world's 14th largest economy. The five biggest chaebol control assets worth more than half of gross domestic product.
A week after her victory, Park said in a meeting with leaders of the top conglomerates that she would make sure fair business activities were encouraged and uncertainties were minimized.
"At the same time, I have a request that I must make to you," Park told the heads of such conglomerates as Hyundai Motor <005380.KS>, Samsung , SK and POSCO <005490.KS>. "It is my feeling that big conglomerates should try to change."
"I believe that the management goal of conglomerates should not remain maximizing profit but should involve pursuing coexistence with the larger community."
"I ask that as you try to overcome management difficulties, that you do not start with restructuring or layoffs but instead with sharing wisdom and pain, by trying as much as you can to save the jobs of our workers."
Park's defeated left-wing challenger in the election had threatened to end the complex shareholding of subsidiaries that allows chaebol owners to control their sprawling business empires.
Park did not say she would introduce any changes to make it easier for companies to lay off workers.
South Korean employment law makes it nearly impossible for companies to dismiss salaried workers, which has led employers to use part-time, or contract, workers to ensure some degree of management flexibility in a notoriously rigid labor market.
South Korea has the third highest rate of temporary workers among Organization for Economic Co-operation and Development member countries.
Chung Mong-koo, chairman of Hyundai Motor Co., Chey Tae-won, chairman of the SK Group and Koo Bon-moo, chairman of the LG Group, were in attendance but not Lee Kun-hee, chairman of the Samsung Group, who was on a business trip abroad.
Park's father, Park Chung-hee, was responsible for building up the chaebol during the 1960s and 1970s with a mix of threats and inducements for their bosses, the fathers and grandfathers of the current company heads.
Analysts said the president-elect was not likely to use regulatory measures on conglomerates but she has pledged to share wealth more widely to try to ease social inequities.
Park is to succeed incumbent Lee Myung-bak in February, who himself was the chief executive of a Hyundai company, who oversaw South Korea's pull out of the 2008 global economic downturn faster than its peers although he has been criticized for favoring export-oriented chaebol.
(Editing by Robert Birsel)