Labor and Management in Standoff for 44 Days
Subcontractor Union Declares Hunger Strike
Amid Government's Call to End Illegal Strike
No Negotiation Schedule Set Since the 5th
Calls for Role of Daewoo Shipbuilding and KDB, Not Negotiators
Difficult to Intervene Due to Potential Subcontracting Law Violations
Estimated Cumulative Losses of 600 Billion Won After Strike
On the afternoon of the 14th, Daewoo Shipbuilding & Marine Engineering employees and executives held a "human chain" event urging the suspension of the strike around Daewoo Shipbuilding & Marine Engineering in Geoje-si, Gyeongnam. [Image source=Yonhap News]
[Asia Economy Reporter Jeong Dong-hoon] As the strike and sit-in protest by subcontracted workers at Daewoo Shipbuilding & Marine Engineering (DSME) prolongs, the labor and management sides are escalating into a 'showdown of strength.' The unprecedented dock occupation protest has entered its fourth week, yet negotiations have made no progress. Although the government is intensifying pressure on the strike suspension from all directions, and local residents and citizens have taken to the streets forming human chains urging the strike to end, expectations for a turnaround are emerging, but finding an exit strategy appears difficult.
Why is the damage from dock occupation increasing... Cumulative losses exceed 600 billion KRW
According to DSME and industry sources on the 15th, the subcontracted workers' union of the Korean Metal Workers' Union in Geoje, Tongyeong, and Goseong (subcontracted union) has been striking since the 2nd of last month, demanding ▲ a 30% wage increase ▲ recognition of full-time union officials ▲ a 300% increase in bonuses, among other demands. Since the 18th of last month, seven union members belonging to the subcontracted union have occupied an oil tanker and the dock at Okpo Shipyard's Dock 1. Occupying a ship under construction is illegal under the Enforcement Decree of the Labor Union Act.
The dock is where ships are built and launched into the water. If this area stops, work on other production lines such as painting, piping, and welding is delayed, causing serious damage to the shipbuilding industry, where meeting construction deadlines directly affects performance. This is also why previous shipbuilding industry strikes have not escalated to extreme protests like dock occupations. The currently occupied Dock 1 at Okpo Shipyard is the world's largest, equivalent to the size of nine soccer fields, capable of constructing four ships simultaneously. Four ships are under construction here, but the launching of an oil tanker scheduled for last month has been indefinitely postponed. To launch a ship, the dock must be filled with water, but due to the union's occupation protest, seawater cannot be filled in the dock. Consequently, DSME's losses are snowballing. DSME is estimated to be losing 25.9 billion KRW in daily sales and 5.7 billion KRW in fixed costs, with cumulative losses since the strike exceeding approximately 600 billion KRW.
Minister of Trade, Industry and Energy Lee Chang-yang, who is urging the strike to end, pledged a swift resolution to the DSME strike at the Korea Chamber of Commerce and Industry Jeju Forum on the same day. Minister Lee said, "The industry is suffering significant damage, so the labor and management parties must negotiate immediately," adding, "The government and related agencies are considering how to create a negotiation atmosphere and cooperate."
DSME has seen increasing operating losses over the past five years due to a sharp decline in orders and rising steel prices. Last year's operating loss reached 1.7547 trillion KRW, and the first quarter of this year recorded an operating loss of 470.1 billion KRW.
Small business owners also say "Stop extreme protests"
Small business owners in Geoje, Gyeongnam, are also urging both labor and management to negotiate and engage in dialogue, warning that the prolonged strike by DSME subcontracted workers could threaten their livelihoods.
The Geoje Small Business Association held a press conference at Geoje City Hall on the day, claiming that the prolonged strike by the DSME subcontracted union, which has lasted over 40 days, has brought a severe crisis to the local economy.
They said, "Small business owners in the Geoje area are struggling daily for survival amid worsening hardships," adding, "The subcontracted union strike is expanding into a nationwide strike with political colors affiliated with the Korean Confederation of Trade Unions." They continued, "We strongly urge the strike, which causes distrust among overseas shipowners amid the shipbuilding boom, to end as soon as possible," and added, "There is growing nationwide distrust and dissatisfaction toward this strike."
They also called on DSME and in-house partner companies to open channels for dialogue and urged the union to stop extreme protests. They emphasized, "The strength to overcome the shipbuilding crisis comes from labor-management harmony and cooperative energy," and "Both labor and management should actively engage in dialogue to resolve the severe pain of small business owners."
Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy and Minister Lee Jeong-sik of the Ministry of Employment and Labor (right) are announcing their position on the prolonged strike of the subcontractor union at Daewoo Shipbuilding on the 14th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kim Hyun-min kimhyun81@
Strike continues on parallel tracks without negotiation table... KDB's 'role theory' also raised
Although the strike is prolonged, no exit is in sight. After the government designated the subcontracted union's dock occupation as 'illegal' and urged its cessation the previous day, the union began a hunger strike protest.
The subcontractor council and the union held three rounds of negotiations earlier this month but failed to open even a negotiation table after the 5th due to significant differences in views. The union argues that the 30% wage increase is to "realize low wages," claiming, "The real wages of subcontracted workers have fallen by about 30% over the past five years, and they face economic difficulties as their wages are at minimum wage levels." The management side states that it cannot accept all union demands.
There are about 100 in-house partner companies at DSME, employing a total of 10,000 people. Among them, about 120 subcontracted union members are participating in the strike. The negotiation parties are the labor and management of each partner company, but the union emphasizes the role of the original contractor DSME and its major shareholder, Korea Development Bank (KDB). Their argument is that "since partner companies operate by receiving progress payments from DSME, DSME must make a decision for wage increases and recognition of union activities to be possible." However, DSME and KDB find it difficult to intervene as it is a labor-management issue of partner companies. The original contractor's involvement in wage negotiations could also violate the Subcontracting Act.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
