"Economic Difficulties Persist... Industry Groans at Forecast of the Worst 'Hatu' (Comprehensive)"

Business Community "Economic Downturn... Plus Labor Union Risks"
Labor Sector Demands Minimum Wage of 10,890 Won
Conflicts Over Annual Salary Increase and Abolition of 임피제 Accumulate

[Asia Economy Reporter Kiho Sung] The industrial sector is groaning under signs of the ‘worst summer labor struggle (夏鬪)’ yet. While major companies are embroiled in conflicts over labor union and wage collective bargaining agreements demanding significant salary increases and the abolition of the wage peak system, the labor sector has proposed an hourly minimum wage of 10,890 won for next year, about 20% higher than this year. Since the launch of the new pro-business government, there are growing concerns that the labor sector may adopt a hardline stance aimed at ‘seizing the initiative,’ which could act as a greater negative factor for the Korean economy amid increasing economic uncertainty.

On the 22nd, the Hyundai Motor Labor Union declared the breakdown of this year’s wage negotiations. The union stated, "Despite 12 main negotiation sessions and several working-level meetings, we could not make any progress on our demands," adding, "We have no choice but to declare the breakdown of negotiations to enforce our demands." The Hyundai Motor union had been requesting the company to present a comprehensive wage proposal.

Following the union’s declaration of negotiation breakdown, the union plans to apply for mediation at the Central Labor Relations Commission on the 23rd. If the commission judges that the positions of labor and management are far apart, it may decide to suspend mediation, and if union members approve a strike vote, a legal strike will be possible.

Additionally, according to the Minimum Wage Commission and the industrial sector, worker representatives at the Minimum Wage Commission proposed an hourly minimum wage of 10,890 won at the 5th plenary meeting held the previous day. This amount is 1,730 won (18.9%) higher than this year’s minimum wage of 9,160 won. When converted to a monthly salary (applying 209 working hours per month), it amounts to 2,276,010 won.

The labor sector argues that “due to recent high inflation, workers earning minimum wage are struggling to make ends meet, making a wage increase inevitable.” On the other hand, the business community responded, "This demand is incomprehensible amid the economic crisis caused by the triple shocks of high inflation, high exchange rates, and high interest rates." The Korea Employers Federation criticized, "An excessive increase of nearly 42% over five years has left small and medium-sized enterprises and small business owners struggling," adding, "The labor sector’s demand for an 18.9% increase is unrealistic and absurd."

Amid worsening business conditions, major companies are engaged in fierce conflicts or ongoing negotiations with unions over wage and collective bargaining agreements.

Samsung Electronics agreed to a 9% wage increase through this year’s labor-management council but has not yet concluded negotiations with the union and is still in a tug-of-war. SK Hynix, which has multiple unions, is conducting separate negotiations with two unions. The technical office workers’ union has demanded a 12.8% wage increase based on the basic salary this year. Korea GM, which begins full-scale wage negotiations on the 23rd, is also expected to face labor-management conflicts due to demands for significant increases.

Violent clashes have also occurred. On the 19th, members of the Korean Tire Metal Union forcibly stopped some equipment at the Daejeon plant, during which an incident of assaulting a responsible employee took place. Meanwhile, the Hyundai Steel union has been occupying the president’s office for 50 days.

Moreover, the labor sector is voicing strong opposition to the abolition of the wage peak system and the relaxation of the Enforcement Decree of the Serious Accident Punishment Act, suggesting that struggles will intensify.

Labor dissatisfaction is expected to lead to strikes. Following the earlier general strike by the Cargo Solidarity Union, the Korean Confederation of Trade Unions (KCTU) will hold a nationwide workers’ rally with 70,000 participants on the 2nd of next month. In mid-month, the Metal Workers’ Union plans a general strike, followed by the KCTU’s nationwide workers’ rally in August, public transport and construction medical unions in September, and the KCTU’s general strike in October, with large-scale outdoor struggles expected continuously through the end of the year.

The business community is highly tense as fears over the complex economic crisis of high inflation and low growth grow, compounded by the increasing ‘union risk.’ An executive at a major corporation pointed out, "Given the difficult economic situation and uncertain future, it is hard to accept the union’s pressure for wage increases," adding, "If conflicts with unions escalate to extreme measures such as strikes, the damage will be borne entirely by the public."