Amid Not Enough Improvement

The labor union of Daewoo Shipbuilding & Marine Engineering Co. (DSME) asks the company to offer a certain percentage of profits in order to boost employee morale.
The labor union of Daewoo Shipbuilding & Marine Engineering Co. (DSME) asks the company to offer a certain percentage of profits in order to boost employee morale.

 

The labor union of Daewoo Shipbuilding & Marine Engineering Co. (DSME), one of South Korea’s leading shipbuilders working on a debt-restructuring plan, announced a plan to raise its base wage for the first time in four years as well as demanded the sharing of 730 billion won (US$684.55 million) of surplus last year. The labor union said the company needs to offer a certain percentage of profits in order to boost employee morale since it was able to post a surplus for the first time in six years at the employees’ expense.

According to shipbuilding industry sources on March 18, DSME’s labor union said at its newsletter, “The company should not fork over 730 billion won (US$684.55 million) of surplus last year to creditors but admit that the labor union is a main agent of production and provide a higher quality treatment befitting its position.

It is true that DSME tried to revive the company by returning some of their salary and carrying out a large-scale restructuring for two years from 2016 to 2017. According to the data from the Financial Supervisory Service (FSS), the number of DSME employees and executives decreased nearly 2,500 from 12,855 at the end of 2015 to 10,183 at the third quarter last year, while its total amount of wages dropped from 989 billion won (US$927.85 million) to 679 billion won (US$637.02 million) over the same period. In addition, the average annual salary of the company’s employees fell from 75 million won (US$70,363) at the end of 2015 to 60 million won (US$56,290) at the end of 2016. The average annual salary in 2017 is expected to be some 50 million won (US$46,904).

However, it is difficult to see DSME demanded a one-way sacrifice of its employees to save the company. DSME President Jung Sung-rip has been returning all his salary from March last year, while other executives are returning 30 to 40 percent of their salary on average, which is higher than 10 percent of production workers. Furthermore, the government has injected more than 7 trillion won (US$6.57 billion) of public funds for the past two years in its bid to save DSME that suffered from accounting fraud and sluggish market. In short, DSME was able to manage to survive at the cost of the people.

In particular, it is hard to think that the company’s situation has improved enough for the labor union to claim its share right now. DSME ran a surplus of 730 billion won (US$684.55 million) last year but recorded more deficits than expected in the fourth quarter in 2017. The company’s sales figures this year and next year are also expected to fall short of that of last year. This is why critics say it is too early for DSME’s labor union to take its share.

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