Amid a prolonged slump in domestic demand, a clear trend of workforce reductions is spreading across the food industry. Major food companies cut large numbers of employees last year, and the mood is that expanding hiring will be difficult this year as well.
According to the Financial Supervisory Service's electronic disclosure system on the 4th, as of the end of last year, Lotte Wellfood had 5,825 employees, down 11.1% (724 people) from a year earlier; Lotte Chilsung Beverage had 5,217, down 8.7% (499); the food institutional sector of CJ CheilJedang had 6,894, down 3.4% (246); and Nongshim had 5,501, down 0.6% (34), showing a decline in headcount at major food companies. However, Samyang Foods, which achieved major success overseas with its "Buldak" series, increased its employee count by 635 (26.6%) to 3,025 from a year earlier. Thanks to the completion and full-scale operation of the Miryang plant, demand surged for production-centered roles.
The primary reason for the workforce decline is the voluntary retirement programs carried out last year. Lotte Wellfood implemented voluntary retirement for the first time since its founding last year and accepted additional applications this year. Lotte Chilsung Beverage also carried out its first-ever voluntary retirement in Nov. last year. A Lotte Wellfood official said, "We implemented voluntary retirement, and overall headcount fell due to staff redeployment during business streamlining, organizational restructuring such as consolidating and merging distributors, and the natural decline of fixed-term workers."
Industrywide, organizations were restructured in response to deteriorating conditions and results, leading to headcount cuts. CJ CheilJedang, Korea's largest food corporations, recorded 861 billion won in operating profit last year, down 15.2% from a year earlier. Operating profit at Lotte Chilsung Beverage and Lotte Wellfood also fell by 18.8% and 30%, respectively.
A food industry official said, "Recently, amid the domestic demand slump, more people are leaving, and even when hiring experienced workers, competition is weaker than before, so vacancies are not easily filled," adding, "With some corporations even carrying out voluntary retirement, it will be difficult for a while to expand hiring."
In fact, entry-level hiring is also declining across the food industry. Except for some corporations such as CJ, Orion and OTOKI, few food companies are launching large-scale open recruitment for new employees. Lotte, which abolished its open recruitment system in 2021, hires new and experienced employees on a rolling basis, standardized every Mar., Jun., Sep. and Dec. The intent is to staff according to each affiliate's situation, so not all affiliates join every hiring season, making the scale of hiring flexible.
Samyang Foods' holding company Samyang Roundsquare and others are also selecting talent through rolling recruitment. A food industry official said, "In the past, companies actively held open recruitment for new hires, but recently, as the market slumps and profitability worsens, the trend is to hire only as needed through rolling recruitment."
Facing worsened profitability amid a slump in domestic demand and rising expenses such as labor and logistics costs, the food industry is unable to raise product prices due to the government's price-stability stance. Instead of cutting headcount, companies are focusing on improving productivity efficiency and targeting global markets.
Lotte Wellfood is moving to substitute cacao-related input costs and adjust recipes, while CJ CheilJedang is pursuing a strategy to reduce more than 4,000 stock keeping units (SKUs) and cut fixed costs. Maeil Dairies also pushed to restructure its business through the absorption-type merger of its subsidiary Maeil Health Nutrition.
Nongshim recently disclosed plans to establish a Russian subsidiary at a shareholders meeting. Orion will strengthen its push into Southeast Asia by promoting construction of its third plant in Hanoi and fourth plant in Ho Chi Minh City in Vietnam. It will also increase investment in its Russia plant.
A food industry official said, "Food has high price sensitivity among consumers, so raising prices is not easy," adding, "To improve revenue, structural reforms through organizational and production efficiency are inevitable."