Steel, shipbuilding labor tensions to flare up after holiday recess
A view of POSCO's electrical steel plant at its Gwangyang steelworks in South Jeolla Province, Sept. 29 / Courtesy of POSCO
POSCO, HD Hyundai Heavy, Hanwha Ocean brace for renewed labor action
Labor disputes at major steel and shipbuilding companies are set to resume after a brief recess over the Chuseok holiday, as unions push for higher wages and greater performance-based rewards amid strong earnings and order backlogs.
POSCO, HD Hyundai Heavy Industries and Hanwha Ocean entered the holiday with wage talks stalled or unresolved, after their unions staged or threatened labor action over their demands. The disputes raise the risk of further disruptions, particularly at shipyards working through multi-year order backlogs.
At POSCO, the union is set to resume wage negotiations after electing new leadership on Oct. 2. Experiencing its first strike since its establishment, POSCO saw the union stage a 48-hour partial strike earlier this month, followed by a second 120-hour partial strike that ended on Sept. 21.
The two sides are at odds over the size and structure of the pay package, with the union seeking a 7.1 percent increase in base pay, bonuses equivalent to 600 percent of base pay, 50 shares under an employee stock ownership plan and a 200 percent holiday bonus.
The company, meanwhile, has offered a 2 percent increase in base pay, a 3.5 million won ($2,600) bonus and 500,000 won worth of local vouchers, among other measures.
POSCO estimates that meeting the union’s demands would require about 1.4 trillion won in additional funds, roughly equivalent to the brokerage consensus for the steelmaker’s operating profit this year.
With about 90 percent of union members backing a strike in an earlier ballot, further labor action is likely if talks fail to make progress. POSCO posted an operating profit of 270 billion won in the second quarter, down 46.6 percent year-on-year.
HD Hyundai Heavy Industries union members rally during a four-hour partial strike in Ulsan, Sept. 11. Courtesy of HD Hyundai Heavy Industries union
In shipbuilding, HD Hyundai Heavy Industries and Hanwha Ocean are also expected to resume negotiations on Tuesday.
On Sept. 18, HD Hyundai Heavy Industries’ union declared that this year’s wage negotiations had broken down after 21 rounds of talks since June. The company has asked the union to resume negotiations on Tuesday, while the union has warned it could step up labor action after the holiday.
The union is seeking a 149,600 won monthly increase in base pay, a 100 percent increase in bonuses and a 30 percent share of operating profit. The company has offered a 110,000 won increase, including 47,000 won in seniority increases, along with incentive pay of 200 percent plus 10 million won and 500,000 won in gift vouchers.
The dispute centers on how to share the benefits of the shipbuilding boom, with the union seeking a greater link between wages and corporate profits rather than relying mainly on one-off bonuses. The union has already conducted four-hour strikes and extended the walkouts to seven hours from Sept. 16 to 18.
Hanwha Ocean is facing a similar dispute over pay and performance-based bonuses. Its union has staged a series of partial and full strikes since late August and halted operations of all four heavy-duty Goliath cranes at the company’s shipyard in Geoje, South Gyeongsang Province, for 24 hours on Sept. 18.
The union is seeking a 149,600 won increase in base pay, higher bonuses, a later retirement age and greater transparency in the performance-pay system. Management has offered a 100,000 won increase, a 6.5 million won lump-sum payment and 1 million won in annual employee benefits.
Samsung Heavy Industries reached a tentative agreement just before the holiday, becoming the first of the three major shipbuilders to settle its wage talks this year.
The agreement changed the basis for calculating its excess profit incentive from 20 percent of economic value added to 10 percent of operating profit, offering a potential reference point for the unresolved disputes at its rivals.