Deficit Shock, Union Strike... Homeplus in Crisis

[Asia Economy Reporter Seungjin Lee] Homeplus, which is pushing for store sales after recording a large-scale deficit last year, is also experiencing internal strife. The labor union has gone on strike after the wage collective bargaining agreement between the management and the union broke down.

According to the distribution industry on the 5th, the Homeplus union held a resolution rally on the 4th and went on strike. On that day, the union held a 'Victory in Struggle Resolution Rally' in front of the MBK headquarters in Gwanghwamun, Seoul, and from the 6th, plans to carry out activities such as all union members posting protest posters while working, store struggles, and publicity campaigns.

Earlier, the union decided to strike with a 79.8% approval rate in the strike action vote. The union demanded an 18.5% wage increase, but the management, which said it could not accept this, failed to find common ground, ultimately leading to the strike.

The union stated, "The union's demands were decided last October," adding, "They say 18.5% is excessive, but even if fully raised, the minimum wage would be 10,000 won, and the monthly base salary would be 2.09 million won."

In response, the management countered, "They demanded eight wage proposals totaling 370 billion won and 138 collective bargaining agreements without recognizing the company's dire crisis situation, repeatedly saying that if an unconditional all-at-once settlement proposal is not presented, negotiations are meaningless."

In particular, Homeplus is in a difficult position as the union went on strike this weekend, the only large mart to avoid the mandatory closure day during the 'Korea Together Sale' period.

A Homeplus official said, "We are very concerned that customers may experience inconvenience in shopping at this time when the Together Sale is in full swing," and claimed, "The strike approval rate, the lowest ever since the establishment of the Homeplus union, is evidence that a considerable number of union members think 'This is not the time for a strike'."

Homeplus has been in continuous conflict with the union as the investment company MBK is proceeding with the sale of three stores: Ansan, Daegu, and Dunsan.

Earlier, the union strongly criticized, "The Ansan store, which is being promoted as the first priority for sale, is the top store among all stores, and closing such a prime store overnight is a self-destructive act with no justification or benefit."

Homeplus says it is unavoidable after recording a large deficit last year. Homeplus recorded a net loss of 532.2 billion won for the 2019 fiscal year (March 2019 to February 2020). Sales and operating profit were 7.3002 trillion won and 160.2 billion won, down 4.9% and 38.3% respectively from the previous year.

Accordingly, Homeplus decided that executives at the department head level and above would voluntarily return 20% of their salaries for three months. Since the 2017 fiscal year, Homeplus has frozen executive salaries and has not paid performance bonuses. This executive salary return also reflects the difficult situation.

A Homeplus official said, "The company is reviewing various management strategies such as asset securitization to overcome the crisis. However, there will be no workforce restructuring," adding, "Rather, we hope the union will not incite crisis and conflict by saying 'mass unemployment will occur' and expect them to return to the negotiation table soon."