[Report] "Company Must Survive to Raise Wages" Labor-Labor Extreme Conflict in Geoje (Comprehensive)

From Labor-Management Conflict to Intra-Labor Dispute
Nearby Commercial Area Devastated by Strike
"Subcontracted Workers and Sense of Solidarity Urgently Needed"

Four Failed Negotiations Between Subcontracted Labor and Management
Wage Increase Rates Near Agreement
Disputes Over Compensation and Employment Succession

Nearby Businesses Struggling Due to Strike
"Mutual Wounds Deep, Recovery Will Take Time"

San-eun Official Warns "If Prolonged, Will Apply for Rehabilitation Procedures"
Warns No Additional Support If Financial Difficulties Arise

On the afternoon of the 21st, the 50th day of the Daewoo Shipbuilding & Marine Engineering strike, police are moving around the site where the subcontractor union is staging a sit-in at the Okpo Shipyard of Daewoo Shipbuilding & Marine Engineering in Ajoo-dong, Geoje-si, Gyeongnam.
[Image source=Yonhap News]

[Asia Economy Reporter Jeong Dong-hoon] "The company has to survive for wages to increase. We are all workers working together... I feel both resentment and despair."

On the evening of the 21st, Seo (39), a production worker at Daewoo Shipbuilding & Marine Engineering (DSME) near Okpo Shipyard in Geoje, Gyeongnam, sighed deeply as he expressed his frustration. While emphasizing solidarity with subcontracted workers, he raised his voice over concerns of mutual destruction due to the strike.

He said, "Even the primary contractor employees haven't seen wages rise for 5 to 6 years," adding, "Now that work is increasing and more manpower is needed, if operations are halted like this, who will take responsibility for the damages?" he lamented.

Geoje, the birthplace of shipbuilding, turned into a 'ghost town'... Tension rises at the dock where 'public authority intervention' is being discussed

Seven members of the Daewoo Shipbuilding & Marine Engineering Geoje Tongyeong Goseong Shipbuilding Subcontractors Union are having a meal while occupying an oil tanker under construction in Dock 1 at the Okpo Shipyard of Daewoo Shipbuilding in Geoje, Gyeongnam, on the afternoon of the 21st. Photo by Jeong Donghoon

In fact, the commercial areas around Ajoo-dong and Okpo-dong near Okpo Shipyard have been devastated since the strike began. While some workers gathered in small groups to have dinner together, there was neither the usual lively laughter nor even the common sounds of music from shops. A local business owner likened Geoje, once called the cradle of shipbuilding, to a 'ghost town.'

At Okpo Shipyard's 1 Dock (shipbuilding yard), occupied by seven members of the Geoje-Tongyeong-Goseong Subcontracted Shipbuilding Branch of the Korean Metal Workers' Union (KMWU) under the Korean Confederation of Trade Unions (KCTU), tension was palpable. Yoo Choi-han, the vice chairman of the subcontracted branch, was confined inside a 1㎥ steel structure on the ship's floor, surrounded by six other workers continuing the sit-in protest. Around the 1 Dock, dozens of workers are guarding the protest site in shifts day and night.

Seven union members of the DSME Geoje-Tongyeong-Goseong Subcontracted Shipbuilding Branch were having a meal while occupying an oil tanker under construction inside 1 Dock at Okpo Shipyard, Geoje, Gyeongnam, on the afternoon of the 21st. Photo by Jeong Dong-hoon.

Under sweltering weather exceeding 30 degrees Celsius and heavy rains during the monsoon season, the expressions and voices of the union members continuing the occupation since the 18th of last month showed fatigue. After the government declared the strike illegal and hinted at deploying public authority, police presence at the site increased to several hundred. Even if police disperse the protest, physical clashes seem inevitable. To approach the union members occupying the oil tanker across the dock, which is several tens of meters deep, one must pass narrow railings and stairs. The protesters have prepared flammable materials such as thinner, raising concerns about physical confrontations.

Subcontracted labor and management failed to reach agreement after four negotiations the previous day... Management reluctant to drop "claims for damages" demand

Meanwhile, subcontracted labor and management failed to reach an agreement despite four negotiations the previous day. They are continuing talks on the morning of the 22nd. Initially on parallel tracks, the parties reportedly reached consensus on wage increase rates. Remaining issues include claims for damages and employment succession for union members belonging to subcontractors who have closed down.

Regarding the main issue of the strike, wages, a compromise was reached after marathon negotiations the previous day when the subcontracted union agreed to the management's proposed 4.5% wage increase. Both sides are reportedly struggling over the issue of claims for damages. Management emphasizes that if responsibility for the illegal strike is not held, it could set a bad precedent and that management could be prosecuted for breach of trust.

The labor side argues that claims for damages are a malicious tool used by employers to suppress workers. The regulation related to claims for damages is found in Article 750 of the Civil Act: "A person who causes damage to another by an unlawful act intentionally or negligently shall be liable to compensate for the damage."

There is little time left for negotiations between subcontracted labor and management. From the 23rd, the entire shipyard will enter the vacation period. If negotiations are not concluded that day, both sides will inevitably fall into the 'quagmire' of a prolonged strike. Like the subcontracted branch, the DSME branch of the Metal Workers' Union under KMWU is concluding a vote on whether to withdraw from the Metal Workers' Union. As of the previous day, over 60% of union members had already voted.

Jung Jeong-gi, the owner of a Japanese restaurant near Daewoo Shipbuilding & Marine Engineering Okpo Shipyard in Geoje, Gyeongnam, is organizing chairs at empty tables. Jung lamented that even common company dinners have completely stopped since the Daewoo Shipbuilding strike. Photo by Jung Dong-hoon

The commercial districts near Okpo Shipyard are staggering after the strike. Merchants near Okpo-dong and Ajoo-dong lamented that the strike piled on top of the decline in customers caused by the COVID-19 pandemic. Banners reading "Long-term strike will ruin the local economy" were hung in various places, and some shops had their shutters down. Jeong Jeong-gi, owner of a Japanese restaurant in Ajoo-dong, said, "Sales have dropped by more than 50% compared to two months before the strike started." At 7:30 p.m., when dinner is usually busy, there were only two customers in a restaurant with over 30 seats. Jeong sighed, "As work decreased, many employees leave by 3 p.m. With the prolonged strike, the atmosphere inside the shipyard has become hostile, so not only company dinners but also family dining out has disappeared." Choi, who runs a chicken restaurant near Okpo-dong, said, "It's been two months since people who suffer together (primary and subcontracted workers) split and fought. The wounds inflicted on each other are so deep that it will take time to overcome."

A warning has come from creditor banks that if the subcontracted union's strike at DSME prolongs, DSME may have no choice but to file for rehabilitation proceedings. A representative of the Korea Development Bank, DSME's main creditor bank, said, "If the subcontracted union's strike at DSME prolongs, there could be problems with normal repayment of principal and interest on debts," adding, "The creditor group’s basic principle is that it cannot provide additional support for financial difficulties caused by operational disruptions."

On the 50th day of the subcontracted strike at DSME, on the afternoon of the 21st at Okpo Shipyard in Geoje, Gyeongnam, Hong Ji-wook, vice chairman of the Metal Workers' Union (right), and Lee Kim-chun-taek, secretary of the Subcontracted Shipbuilding Branch, were seen touching their heads as a meeting with representatives of partner companies was adjourned. [Image source: Yonhap News]

If the strike prolongs and DSME faces financial difficulties, it is interpreted as a 'warning message' that additional financial support under creditor management, as before, will not be available. If the creditor group refuses DSME's request for financial support, DSME will have no choice but to apply for rehabilitation proceedings in court. The court compares the going-concern value and liquidation value and initiates rehabilitation proceedings if it judges that the value of continuing the business is greater than liquidation. However, many view the possibility of DSME undergoing liquidation procedures as more likely.