Labor Unions Demand Excessive Wage Hikes

So-called “aristocratic labor unions” are attempting to raise wages by hundreds of millions of won, citing price hikes. Labor unions of major Korean conglomerates are putting pressure on the management by threatening to go on strike if their wage demands are not met, even in the midst of a stagflation crisis.

Korea’s average salary and salary increase rate already eclipse those of advanced countries, including Japan and European countries. A wage gap between large companies and small and medium-sized enterprises (SMEs) in Korea is also the widest in the world.

Evidence of wage inflation comes with several numbers. The Korea Employers Federation’s analysis of wage increase rates by company sizes in Korea, Japan, and 15 major EU countries from 2002 to 2018 shows that the monthly wage increase rate of large Korean companies during this period stood at a whopping 120.7 percent (from 2,284,000 won to 5,042,000 won). In the case of the EU countries, the growth rate sat at only 37.3 percent (from 2,593 euros to 3,562 euros) during the same period. In Japan, the amount dropped by 5.1 percent to 459,000 yen from 483,800 yen.

Until 2002, the average wage of employees at Korean conglomerates which was lower than those of Japanese and EU workers reached the highest amount among the three in 2018. Considering that Korea generally has lower consumer prices than Japan and the EU, Korean employees have enjoyed higher real income.

A wage gap between large corporations and SMEs was also found to be the widest in Korea among the three. As of 2018, the difference in total monthly wages between Korean SMEs with 10 to 99 employees and large companies was 2,026,000 won far higher than that of Japan (145,700 yen or about 1.38 million won) and that of the EU (866 euros or about 1.18 million won).

Comparing wage increase rates of SMEs in Korea, Japan and the EU from 2002 to 2018, Korea posted an 87.6 percent wage increase which was higher than Japan with a 0.8 percent wage increase and the EU with 39.1 percent. But Korean SMEs’ wage growth rate lagged behind that of large Korean enterprises. In annual wage increase rates by seniority and wage gaps by industries, Korea towered over Japan and the EU.

This deepening wage inflation and polarization are rising as a social problem going beyond consumer price hikes. But unionized workers at large Korean corporations already earning more than 100 million won a year are demanding additional pay raises.

The Joint Wage Negotiation Group assembled with those from the Samsung Electronics Office Workers’ Union, the Samsung Electronics Gumi Branch Union, the Samsung Electronics Donghaeng Union and the Nationwide Samsung Electronics Union are demanding a flat raise of 10 million won in their annual salaries and 25 percent of the company’s operating profit as their performance bonuses. The SK Hynix Technical Office Workers’ Union has requested a 12.8 percent wage increase in the basic salary for this year.

Members of Hyundai Motor’s labor union have demanded an increase of 165,200 won in the basic salary (excluding salary increases by service years), the recruitment of new workers, job security through the extension of the automaker’s retirement age, payment of 30 percent of the previous year’s net profit as performance bonuses and the establishment of a future car factory in Korea. Following the application for dispute arbitration with the Central Labor Relations Committee, unionists decided to hold a vote on beginning staging a strike on July 1. If the strike proposal is passed in the union member vote, the Hyundai Motor Union will walk off the job for the first time in four years since 2018.

Unionized workers at Hyundai Steel, a sister company of Hyundai Motor, also occupied their president’s office at Dangjin Steel Works in South Chungcheong Province on May 2. They are continuing to protest for more than 50 days, demanding payment of four million won in special incentives.

Those at GM Korea are demanding payment of 400 percent of their regular wage or 16.94 million won as a bonus and production of electric vehicles at the Bupyeong 2 plant along with a basic wage increase. At Renault Motors Korea, unionists demanded a lump-sum payment of 5 million won but the management rejected it, keep the labor conflict on.

Under these circumstances, physical collisions also occurred. Hyundai Steel has filed a complaint with the police to disband the union members occupying by the president’s office, but no action has been taken yet, the company said.

The management of Hankook Tire & Technology claimed that members of the Korean Metal Workers Union stopped the operation of facilities without permission and assaulted management officials on June 19 but the labor union is putting the blame on both sides.