Discrepancies Before Full-Scale Labor Negotiations... Industry Groans at Signs of a Tough Summer

Labor Unions Demand 20% Minimum Wage Increase for Next Year
Labor-Management Negotiations at Each Company Continue to Face Difficulties
Business Community Expresses Concern Over Possible Chain Strikes

[Asia Economy Reporter Kiho Sung] The industrial sector is groaning under signs of the ‘worst summer labor struggle (夏鬪)’ yet. The labor sector proposed a minimum wage for next year of 10,890 KRW per hour, about 20% higher than this year. In response, labor unions at various companies are demanding large-scale wage increases. Additionally, there are uneasy forecasts that the labor sector may launch a ‘preemptive’ hardline struggle following the inauguration of the new government.

According to the business community on the 25th, the Hyundai Motor Company 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 the demands,” adding, “We have no choice but to declare the breakdown of negotiations to enforce our demands.” The Hyundai Motor union had been demanding the company present a comprehensive wage proposal.

The union is expected to hold a strike authorization vote on July 1. If the Central Labor Relations Commission judges that the positions of labor and management are far apart, it may decide to suspend mediation, and if union members approve the strike vote, a legal strike will be possible.

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

The labor sector argued that “due to recent high inflation, workers earning the minimum wage are struggling to make ends meet, making a wage increase inevitable.” On the other hand, the management sector opposed, saying, “This demand is incomprehensible amid an economic crisis caused by the triple threats 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 will start full-scale wage negotiations on the 23rd, is also expected to face labor-management conflicts due to demands for a large increase.

Violent clashes have also occurred. On the 19th, members of the Korean Tire Metal Workers’ Union forcibly stopped some equipment at the Daejeon plant, resulting in an assault on a responsible employee. Meanwhile, the Hyundai Steel union has occupied 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 Serious Accident Punishment Act enforcement decree, suggesting that struggles will intensify.

Concerns are growing that labor dissatisfaction could lead to large-scale strikes. Following the previous Cargo Solidarity general strike, the Korean Confederation of Trade Unions (KCTU) will hold a nationwide workers’ rally with 70,000 participants on August 2. In mid-August, the Metal Workers’ Union plans a general strike, followed by the KCTU nationwide workers’ rally in August, the Public Transport and Construction Medical Workers’ Union in September, and the KCTU general strike in October, with a series of large-scale outdoor struggles expected through the end of the year.

The business community is on high alert as fears of a ‘union risk’ grow amid the complex economic crisis of high inflation and low growth. An executive at a major corporation said, “Given the difficult economic situation and uncertain future, it is hard to accept the union’s pressure for wage increases,” warning, “If conflicts with unions escalate to extreme measures such as strikes, the public will bear the brunt of the damage.”