Shinsegae Department Store Offers Voluntary Retirement to Employees under Wage Peak System with Severance Pay

For Employees Aged 55 and Over Reaching the Wage Peak System Age
Severance Pay Equivalent to Three Times Annual Salary... "Providing Career Transition Opportunities"

Shinsegae Department Store is accepting voluntary retirement applications from employees under the wage peak system. As the impact of consumer recession due to rising prices continues, restructuring is taking place across the distribution industry.

According to the distribution industry on the 22nd, Shinsegae Department Store recently proposed voluntary retirement to some team leader-level employees. This voluntary retirement targets team leader-level employees born in 1969 (aged 55) or older, with about 100 employees expected to be eligible.

Shinsegae Department Store Main Branch. Provided by Shinsegae Department Store

This voluntary retirement is not being conducted publicly. Shinsegae Department Store individually contacted the eligible employees to propose voluntary retirement, reportedly offering a consolation payment equivalent to three times their annual salary as a condition.

However, it is known that almost no eligible employees have accepted the offer so far. Regarding this, a source familiar with Shinsegae Department Store’s internal situation said, "There is an internal atmosphere that it is disadvantageous to retire before the retirement age because job security is solid."

Shinsegae Department Store stated that it has conducted retirement applications for employees under the wage peak system every year. A Shinsegae official explained, "It is true that we proposed (retirement) to some team leader-level employees subject to the wage peak system to give them the option to plan a second life," adding, "It is not an official voluntary retirement but an opportunity for career transition, which is implemented annually."

The department store industry, including Shinsegae Department Store, has faced growth slowdown due to sluggish consumption caused by high inflation and economic recession.

Shinsegae Department Store recorded sales of 619.6 billion KRW and operating profit of 88.3 billion KRW in the third quarter of this year. Compared to the same period last year, sales increased by 2.5%, but operating profit decreased by 4.8%, worsening profitability. Due to abnormal weather this year, a late heatwave approaching 30 degrees Celsius continued until the end of September, resulting in poor sales of the transitional autumn/winter (FW) fashion season. Typically, clothing accounts for nearly 40-50% of department store sales.

Other Shinsegae affiliates besides the department store have already conducted or are conducting voluntary retirement programs. Shinsegae DF, which operates Shinsegae Duty Free, is accepting voluntary retirement applications until the 29th. This is the first time Shinsegae DF has implemented a voluntary retirement program since its establishment in 2015. At the same time, 7 to 8 executives, including CEO Yushin Yeol of Shinsegae DF, have agreed to forgo 20% of their salaries starting this month.

Earlier, Emart also conducted a company-wide voluntary retirement for the first time since its founding in March. At that time, the voluntary retirement targeted employees with more than 15 years of service. Then in June, Emart Everyday, a corporate supermarket (SSM), conducted voluntary retirement ahead of its merger with Emart. The e-commerce affiliate SSG.com also conducted its first voluntary retirement since its incorporation in July, followed by Gmarket implementing voluntary retirement in September.