Posco, the South Korean steel giant, is on the brink of its first-ever strike in its 55-year history as wage negotiations between management and the labor union stall. Nearly 80 percent of unionized workers voted in favor of a strike, citing concerns over stagnant salaries. The union demands a 13.1 percent salary hike and other benefits, while Posco counters with its proposal, highlighting the potential financial strain of the union's demands. The strike's consequences could significantly impact South Korea's steel industry and ripple through the manufacturing sector.
In a historic turn of events, South Korean steel titan Posco faces the looming threat of its first-ever strike, marking a significant chapter in its 55-year history. Months of wage negotiations between the company's management and its labor union have reached an impasse, with the possibility of a strike now looming on the horizon.
During a vote held over the weekend, nearly 80 percent of Posco's unionized workforce voiced their support for a strike. This marks the first time in Posco's history that its union has authorized a strike since the company's establishment in 1968. Of the 11,145 union members, an impressive 96.51 percent actively participated in the vote held over Saturday and Sunday, with 77.79 percent approving the strike.
At the heart of the dispute lies the issue of stagnant wages. According to the union, employee salaries have seen minimal increases over the past three years, with only a 2 percent raise in 2019 and a 2.5 percent increase in 2021, followed by a wage freeze in 2020.
In response to this wage stagnation, the union is advocating for a substantial 13.1 percent hike in base salaries. Additionally, they seek an allocation of 100 shares of treasury stock per member, a reconfiguration of the performance incentive system, and an increase in lunch subsidies.
Posco, on the other hand, contends that these demands are financially untenable. The company estimates that meeting the union's proposals would cost approximately 1.6 trillion won (equivalent to $1.18 billion), roughly equating to 95 million won per employee.
In its counterproposal, Posco has put forth an average wage increase of 162,000 won, one-to-one matching payments for stocks up to 4 million won, the inclusion of free lunches in basic wages, a flexible four-day biweekly work schedule, and the opportunity for retirees to be rehired at 70 percent of their previous salaries.
However, the union argues that the proposed wage increase of 162,000 won already incorporates a pre-existing step-based pay raise of 70,000 won, resulting in an actual increase of only 92,000 won. Furthermore, they view the four-day bi-weekly work schedule as deceptive, as it still requires the standard 40-hour workweek, making it no different from the current arrangement.
Following the union's affirmative vote for a strike, a mediation committee overseen by the National Labor Relations Commission was convened on Monday to determine the scale and duration of a potential strike. As of 3 p.m., both management and the union indicated a willingness to continue negotiations.
A full-scale labor strike at Posco could pose significant challenges to South Korea's steel industry, which relies on continuous operations. Disruptions would strain machinery and potentially take months to recover from, especially if the shutdown extends beyond five days.
Moreover, the labor unrest at Posco could send shockwaves through the nation's manufacturing sector, affecting small and medium-sized companies reliant on Posco for raw materials. Such a strike could create supply and demand imbalances in crucial industries like automobiles, shipbuilding, and home appliances.
Posco stands at a pivotal moment in its history, with the threat of its first-ever strike looming large due to wage disputes. As the company and its labor union grapple over salary hikes and benefits, the potential consequences of a strike extend beyond Posco itself. The steel industry's continuous operations and South Korea's manufacturing sector could both bear the brunt of such labor unrest. As negotiations continue, the outcome will have far-reaching implications for various industries and the nation's workforce.