[Exclusive] Daewoo Eonseol Considers 'Paid Leave' at Headquarters... Strategy to Overcome Recession

Second Paid Leave System Since 2018
Up to 2 Months... Headquarters and Staff Schedule Adjustments
Cost Reduction and Refresh Effects Amid Recession

Daewoo E&C has introduced a 'paid leave system' of up to two months for its headquarters employees. This measure is aimed at reducing labor costs amid the construction industry downturn, and it is understood that negotiations between labor and management are currently underway.

According to industry sources on the 9th, Daewoo E&C's labor and management recently discussed the timing of the paid leave implementation and the resulting employee schedule adjustments. This system, named 'Refresh Leave,' is valid for one year from the implementation date. Except for executives, the leave period is proposed to be a total of one month in 15-day increments (up to two months upon request), with employees receiving 50% of their base salary. Daewoo E&C plans to finalize the details and announce them within this week.

Daewoo E&C decided to reduce labor costs as the domestic housing market stagnates due to high inflation, high interest rates, and high exchange rates, putting profitability at risk. Labor costs, which include salaries, welfare expenses, and rent, are part of selling and administrative expenses, and the company aims to improve operating profit by cutting these costs. It is also reported that the company is encouraging headquarters employees to support field work.

According to the Financial Supervisory Service's electronic disclosure system, Daewoo E&C recorded consolidated sales of 2.4873 trillion KRW and operating profit of 114.8 billion KRW in the first quarter of this year. Compared to the same period last year, sales decreased by 4.6%, and operating profit dropped by 35.0%. Net profit was 91.5 billion KRW, down 6.9% during the same period. Last year's consolidated performance showed sales of 11.6478 trillion KRW, an 11.8% increase from the previous year, but operating profit decreased by 12.8% to 662.5 billion KRW.

Daewoo E&C has implemented paid leave in the past. In the second half of 2018, employees of the Plant Business Division took two months of paid leave. Other divisions were also allowed to take paid leave if there were applicants. In the first half of the same year, Daewoo E&C posted an operating profit of 306.8 billion KRW on an individual basis, but the plant division alone incurred an operating loss of 77.436 billion KRW, prompting labor cost reductions.

A Daewoo E&C official said, "I understand that labor-management coordination is in its final stages," adding, "The internal response varies depending on the position, but an announcement will be made soon." The official also stated, "This is to respond to changes in the business environment and to support a work environment with a balance between work and life," adding, "Schedules and handovers will be adjusted by each division to ensure no disruption to ongoing projects."