More than 3,000 employees have been laid off from South Korea's four major petrochemical companies over the past year. The workforce reductions come as the industry grapples with oversupply from China and a slowdown in global demand.
According to an analysis of the semi-annual reports from LG Chem, Lotte Chemical, Hanwha Solutions, and Kumho Petrochemical, the total number of employees as of June 30 this year stands at 22,537, down from 25,616 during the same period last year. This represents a reduction of 3,079 employees, or over 12% of the total workforce.
LG Chem experienced the most significant decline, with its workforce shrinking by 1,431 employees (10.5%) to 12,243 by the end of the first half of this year. In the petrochemical sector alone, the number of employees fell from 6,047 to 5,569, a decrease of 478 (7.9%).
Lotte Chemical reported the largest percentage drop, with its workforce decreasing by 1,046 employees (23.0%) from 4,555 last year to 3,509 this year. The company explained that this reduction was largely due to workforce reallocation rather than layoffs, as employees were separated during the merger process with HD Hyundai Chemical.
Hanwha Solutions also saw a reduction, with its staff decreasing from 5,790 to 5,135, a drop of 655 employees (11.3%). The chemical division responsible for petrochemical operations saw a reduction from 2,411 to 2,278, a decrease of 133 (5.5%).
In contrast, Kumho Petrochemical's workforce increased from 1,597 to 1,650, an increase of 53 (3.3%). However, this change is largely attributed to natural fluctuations due to new hires and retirements, resulting in little overall change from the previous year.
The backdrop to these workforce reductions is a decline in profitability due to global oversupply. The petrochemical industry has traditionally been viewed as a stable sector with high salaries and long-term job security. However, ongoing poor performance has led to reduced capital investment and downsizing efforts.
LG Chem has implemented voluntary retirement programs in its petrochemical and advanced materials divisions, and plans to continue these efforts to streamline its organization. While Lotte Chemical has not officially conducted voluntary retirements, it has been pursuing workforce efficiency measures, particularly at its Ulsan plant, targeting long-serving employees and those nearing retirement.
Market analysts predict that government-led restructuring in the petrochemical industry will continue, leading to further workforce reductions as the sector moves into a phase of facility downsizing.
One industry insider noted, "Given the current state of the petrochemical market, companies must cut fixed costs, including labor, to survive. As the industry undergoes restructuring, it is inevitable that surplus labor will emerge, and it will be challenging to absorb all employees even with redeployment efforts."
* This article has been translated by AI.
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