Nearly 2,600 employees have left Homeplus Co., which is undergoing rehabilitation proceedings, so far this year. On top of that, with Homeplus deciding to close 37 hypermarket stores where it recently suspended operations, about 3,500 more employees are being pushed into job insecurity. As a cash crunch has led to delayed wage payments, the union is escalating a hunger strike and rallies, urging the government and majority shareholder MBK Partners to come up with responsible measures.
According to the Korean Confederation of Trade Unions (KCTU) Mart Industry Labor Union on the 7th, the number of Homeplus Co. employees fell to 15,398 at the end of April from 17,986 at the end of last year. That means 2,588 people resigned between January and April this year alone. With the rehabilitation process dragging on and wage delays and store shutdowns overlapping, employee departures appear to be accelerating.
Job insecurity is likely to grow further. Homeplus Co. temporarily suspended operations at 37 of its 104 hypermarket stores nationwide last month and decided to close those stores this month. The company was said to have notified the union on the 4th via an official letter of its plan to close the 37 suspended stores. About 3,500 employees work at the stores slated for closure.
Homeplus Co. plans to proceed with reassignments and voluntary retirement for employees at the stores to be closed. For employees at the manager level and above, the company intends to offer voluntary retirement pay equivalent to three months of salary, and for senior-level and below, provide employment stability support payments. However, such support is premised on the execution of emergency operating funds from creditors, namely a DIP loan, making actual payment uncertain.
Meritz Financial Group, the largest creditor, is reportedly demanding a joint guarantee from MBK Partners as a condition for the loan. Homeplus Co., on the other hand, is said to find it difficult to accept that condition, leaving the emergency funding still uncertain. If funding is delayed, there are concerns that not only payments of voluntary retirement and employment stability support, but also operations at remaining stores, will inevitably be disrupted.
Wage delays and product shortages are already appearing on the ground. Due to a shortage of operating funds, Homeplus Co. paid only 25% of April wages and reportedly failed to pay May wages. With deliveries not proceeding normally, some stores are seeing empty shelves and declining customers, creating a vicious cycle. Falling sales are feeding back into the cash crunch.
Union pushback is also intensifying. The Mart Union's Homeplus chapter began a hunger sit-in on the 14th of last month, calling for normalization of Homeplus Co. The union has demanded an injection of public funds and government intervention, saying that the suspension of operations at 37 stores and the push for voluntary retirements are increasing the suffering of employees and tenant shop owners.
Recently, the level of struggle has risen. The union expanded a hunger protest in Gwanghwamun, alleging that Homeplus Co. is not only closing the 37 suspended stores but also considering suspending operations at about 10 more locations. The Mart Union says, "The majority shareholder MBK Partners' evasion of responsibility is making mass unemployment a reality," and argues that the government should directly devise measures for job retention and normalization.
Meanwhile, the court extended the deadline for approval of the Homeplus Co. rehabilitation plan to July 3. However, some say that if creditor funding and consultations on the rehabilitation plan are delayed, it will be hard to rule out further suspensions of operations or even liquidation.