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| Homeplus headquarters in Gangseo-gu, southwestern Seoul / Korea Times file |
By Kwak Yeon-soo
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| Homeplus CEO Im Il-soon |
The discount store chain operator initiated talks with its union on a wage and collective bargaining agreement Nov. 14, which addresses increasing the company's minimum wage and enhancing the overall working environment.
The Homeplus union has been demanding the company increase the minimum monthly wage to 2.09 million won ($1,776), up 18.5 percent from the current 1.76 million won.
"Each year the company spends more than 120 billion won on dividends, but it has been reluctant in increasing the wages of workers," the union said in a statement. "Not enough money is being spent on employees."
According to the Korean Mart Labor Union, Homeplus paid about 238.8 billion won to its workers in 2018, 237.9 billion won in 2017 and 213.2 billion won in 2016.
The union also denounced the discount store chain's annual dividend payout that has increased its debt rate and undercut its financial value.
Financial analysts said the union's wage hike demand is too extreme, adding the pay issue could weigh on the company amid its weakening profitability.
Homeplus logged 151 billion won in operating profit last year, down 44 percent from 2018, with sales also backpedaling to 6.4 trillion won from 6.66 trillion won during the same period.
"If the minimum wage goes up, profitability will go down. Given that retailers are already suffering from deteriorating profits due to weakening domestic consumption and the rise of e-commerce, the union's excessive demand could negatively affect the company's credit rating as well," a Korea Investors Service analyst said.
"However, because workers' wages take up only a small part of the company's overall expenses, its impact won't be huge."
Competitor Lotte Mart has been in talks with its union on a wage and collective bargaining agreement since Aug. 14 and E-mart is planning to begin talks early next year.
The company remained cautious about the ongoing negotiations.
"We initiated the talks just a week ago. For now, we cannot say whether things are going well or when we can reach a deal with the union," a Homeplus official said. "We are approaching the negotiations carefully."
Meanwhile, the discount store chain granted permanent full-time employment status to all of its 14,000 contract workers at 124 stores earlier this year. Their base wage increased by 7.2 percent after their status was converted to regular positions.
E-mart reported an operating profit of 116.2 billion won in the third quarter this year, down 40.3 percent from a year earlier. Lotte Mart logged 12 billion won in the July-September period, down 61.5 percent from the same period a year ago.
