Samsung Electronics will downsize its payrolls by 10 percent in its support workforce in the headquarters while cutting back on general expenses by 50 percent next year. This is a preemptive move to an adverse business condition in response to the ongoing slump in the smartphone market. According to industry sources on September 7, Samsung has recently begun a downsizing measure focusing on those engaged in back-office operations including finance, personnel, and public relations. Instead of taking applications after announcing a voluntary retirement program in public, the company opted to encourage voluntary retirement or transfer to other affiliates through personal interviews with personnel department managers.

 

The main reason for Samsung Electronics to resort to the downsizing measure has to do with the fact that it may face another difficult year in 2015 after the first year for which it saw its quarterly sales revenue fall in 2014. Given the government’s urge to raise the legal retirement age to 60 from next year, the company needed to cut back on the number of senior manager level payrolls.
 

In addition, the company proposed a guideline under which it cuts back on general expenses by 50 percent. It saved up to 1.8 trillion won in selling and administrative expenses in the first half of this year by not spending already-planned budget items. It remains to be seen whether and how Samsung’s preemptive move to restructure its business will have any impact on industrial sectors suffering from anemic financial results such as shipbuilding, shipping, steel, and petrochemical industries.