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HHI to Face Greatest Crisis Ever as Labor Union Threatens Strikes
Rock and Hard Place
HHI to Face Greatest Crisis Ever as Labor Union Threatens Strikes
  • By Jung Min-hee
  • July 22, 2015, 02:45
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The labor union of Hyundai Heavy Industries (HHI) will go on strike for higher wages worth some 250,000 won (US$216.56) per month again this year. Even though HHI showed the greatest-ever operating losses of 3.2 trillion won (US$2.77 billion) last year, the union forced the company to increase base pay by 47,000 won (US$40.71) with the first strike in 20 years last year. Also, the union is coming under fire for asking for a considerable wage hike again this year. This is in stark contrast with Daewoo Shipbuilding & Marine Engineering, Hanjin Heavy Industries & Construction, and STX presenting a wage freeze to its labor union, due to the recent depression in the offshore plant market.

The HHI labor union is holding a vote on a possible strike for three days from July 21. This year, the union is demanding that the company increase the base monthly wage by 127,560 won (US$110.50) and the working environment pay by 100 percent, give a fixed annual bonus of two and a half months’ base pay, adopt a pension system that saves 3 percent of the base salary for old-age pension, and establish employee welfare funds. Besides the base pay increases, the union is asking for a raise worth 250,000 won (US$ US$216.56) per month when combining all demands. It means that the union claims to make at least 75 million won (US$64,969) a year, excluding temporary incentives, performance-related pay, adjusted pay according to annual and monthly leave, and extended work allowance.

Due to its accumulated deficits in the first quarter of this year, HHI is considering the demands to be excessive and is asking the union to reconsider the request. But the union refused. The labor union asked the National Labor Relation Commission (NLRC) to arbitrate the labor dispute last month, and the NLRC decided not to continue the mediation on July 9, since management and the union showed big differences in opinions.

An official from HHI said, “The company has reduced the number of executives by 30 percent, carried out a reshuffle and early retirement offers from last year. However, the labor union has refused the company’s desperate request to reconsider the excessive demand on wages, and is voting on strike action.”

Most of all, outside sources, including the regional Chamber of Commerce and Industry, are recalling the union’s promise in the wage and collective agreement in Feb. to contribute to the company overcoming its management crisis.

An official from the Ulsan Chamber of Commerce and Industry said, “Despite the fact that the company is facing the biggest-ever crisis since its foundation, the labor union is asking too much. The company’s business situation is expected to worsen and suffer from steady deficits in the future. However, the union is leaving it out of consideration.”