Trade unions in South Korea are demanding new labor-management relations under the new government. The Korean Confederation of Trade Unions (KCTU) is even calling for direct negotiations between workers and the government instead of those in the framework of the tripartite committee. Under the circumstances, labor-management relations are posing another challenge to South Korean companies, which are already having a hard time due to trade protectionism and China’s retaliation for THAAD deployment in South Korea.
The atmosphere has changed a lot in companies in the Korean Metal Workers’ Union of the KCTU since the inauguration of the new government. Workers’ voices have been raised to a significant extent in those companies. One of such examples is Hyundai Motor Company. This company and its workers had their fourth round of wage negotiations for this year on May 11, the day after the inauguration. There, Park Yoo-ki, head of its labor union, declared that innovative labor-management relations hinge on the management’s will and he will wait and see how relations between the government and the union and the management and the union will change under the new government. Earlier, the labor union demanded the payment of 30% of the company’s net profit as bonuses for its members along with employment guarantee and retirement age extension. These are quite burdensome on the part of the automaker in that its sales in China dropped by 14% in the first quarter of this year and its operating profit ratio hit a record low of 5.5% in 2016.
Things are not that different in Kia Motors. “The new President is talking about job creation, chaebol reform and temporary worker issues,” Kim Sung-nak, head of its labor union, said that day, adding, “Employers need to face the issues without sidestepping.” A similar atmosphere is being witnessed in GM Korea, too.
The KCTU has listed a series of demands since the inauguration of new President Moon Jae-in, who is considered to be friendly to labor unions unlike conservative former Presidents. On May 12, it demanded a minimum hourly wage of 10,000 won, solutions to temp issues and youth unemployment, guarantee of three basic labor rights and shorter working hours, claiming that these are to be handled by direct negotiations between the government and itself with the tripartite committee having forced its members to make a unilateral concession against their will.
Some companies are in even worse situations. For instance, Korean Air and its pilots’ union have yet to wrap up their negotiations for both 2015 and 2016. They had a meeting on May 12 but failed again to make a compromise. Another example is Hyundai Heavy Industries, where wage negotiations for 2016 have already continued for one year with its employers and employees demanding a 20% cut and an increase in base pay, respectively. Kumho Tire recently failed to reach an agreement on last year’s wages after its 24th round of negotiations. “It seems that the negotiations are showing little progress due to expectations that the new government will be more in favor of labor unions,” said an industry source.
The employment guarantee demanded by the labor union in Hyundai Motor Company has to do with the fourth industrial revolution and the development of electric vehicles. This type of cars has a simple transmission and requires no engine and, as such, can be manufactured by a smaller number of workers. Many South Korean companies are regarding the government’s policy for reducing the number of temps and trade unions increasing their influence as obstacles to their business in the fourth industrial revolution era. Some experts point out that a combination between a rapid decrease in the number of jobs in the era and required employment of temps as regular workers will result in employment rigidity and a drop in the number of new jobs.