Politicians slam POSCO's once-lauded hiring plan

Members of the Korean Metal Workers' Union chant in front of the Supreme Court in Seoul, April 16, urging POSCO to ensure equal treatment of subcontracted workers at its steelmaking plants. Yonhap

The ruling Democratic Party of Korea (DPK) has begun voicing concerns over POSCO's plan to directly hire around 7,000 subcontracted workers performing manual labor at its plants in Pohang, North Gyeongsang Province, and Gwangyang, South Jeolla Province.

With the plan drawing severe backlash from both regular and subcontracted workers, the shift in political sentiment is adding pressure on the steelmaker ahead of the June 3 local elections.

The election campaign of Min Hyung-bae, the DPK candidate for the proposed South Jeolla-Gwangju integrated special city, issued a statement denouncing POSCO's plan as an attempt to sidestep repeated Supreme Court rulings ordering the company to ensure equal treatment of subcontracted workers, who are under its supervision and perform similar duties to regular employees.

The criticism comes as it was revealed that POSCO plans to classify newly hired workers separately and pay them about 60 percent of existing employees' wages.

"The Ministry of Employment and Labor should investigate the matter and take firm action against any legal violations," the campaign said Wednesday.

POSCO CEO Lee Hee-geun, right, talks with Rep. Jung Chung-rae, chairman of the Democratic Party of Korea, at the steelmaker's plant in Gwangyang, South Jeolla Province, April 9. Yonhap

When POSCO announced April 7 that it would directly hire subcontracted workers, the move was broadly welcomed by the government and the ruling party, as well as the main opposition People Power Party (PPP).

"I would like to publicly commend POSCO for aligning with the government's policy direction," Rep. Jung Chung-rae, chairman of the DPK, said during a visit to the company's Gwangyang plant on April 9.

PPP lawmakers representing districts in Pohang also welcomed the decision.

After the unequal treatment issue surfaced, however, Rep. Lee Yong-woo of the DPK and Rep. Jeong Hye-kyeong of the minor opposition Jinbo Party joined unionized subcontracted workers in protesting POSCO's hiring plan.

"POSCO's hiring plan is effectively deceptive," Jeong said at a press conference on April 29.

POSCO's existing employees have also threatened to stage what would be the first strike in the company's 58-year history, after management declined to apologize for their frustration.

They have raised concerns about potential reductions in welfare benefits as the workforce expands. Those concerns intensified after the company told investors during an April 30 earnings call that hiring subcontracted workers would have a limited impact on labor costs.

POSCO has reiterated that it will continue to communicate with employees.