POSCO Facing Recession, Fire, and Strike Threat... Labor-Management Disagreement Over 'Rehiring Only Union Members After Retirement'

Union Emphasizing Clarity
Strike Possibility Higher Than Last Year

The POSCO Labor Union held the launch ceremony of the Dispute Countermeasures Committee in front of the Gwangyang Steelworks in Jeollanam-do on the afternoon of September 6 last year. Photo by Yonhap News

POSCO, surrounded by domestic and international adversities such as sluggish business conditions, consecutive fires, and risks stemming from Trump, is facing its first-ever strike crisis.

On the 25th, POSCO's representative bargaining union, the Korean Federation of Metalworkers' Unions POSCO Labor Union (POSCO Union), announced that the members voted in favor of industrial action. The POSCO Union conducted a mobile vote on strike approval from 5 a.m. to 5 p.m. on the same day, with 5,733 out of 7,934 members (72.25%) voting in favor. There were 1,623 votes against.

The labor and management held the second mediation meeting at the Central Labor Relations Commission on the 21st, but negotiations ultimately broke down. The management proposed an 80,000 KRW increase in base pay, a one-time 3 million KRW incentive for achieving management goals, and a 3 million KRW incentive for labor-management harmony. However, the union reportedly demanded an 8.3% wage increase and a 300% incentive. The main point of contention between labor and management is known to be "benefits exclusively for union members." The union is demanding ▲ 100% reemployment after retirement only for union members ▲ separate settlement payments, which the management has rejected.

In response to the union's approval of industrial action, POSCO stated, "Despite facing more severe management conditions than ever before, the company proposed a progressive offer," adding, "We are deeply regretful that negotiations continue to be difficult despite our utmost efforts to communicate with the union and resolve the issue peacefully." They further stated, "The company will continue to make efforts to peacefully conclude negotiations."

If the POSCO union strike materializes, it will be the first strike in the company's 56-year history. The POSCO Union took steps toward its first strike last year but a dramatic agreement prevented the strike from occurring. If an actual strike happens this year, not only POSCO but also other steelmakers supplying raw materials, as well as forward industries such as automotive and shipbuilding, will experience disruptions in the steel supply chain.

Inside and outside the industry, the possibility of a POSCO union strike is seen as higher than last year. Kim Seong-ho, chairman of the POSCO Union, was elected in 2022 with 52% of the vote and successfully re-elected last month with 82%. Chairman Kim said, "I attended the negotiations directly, but there were no additional proposals," adding, "I interpret this as the management telling us to strike, so we will prepare for collective action." He emphasizes clarity and has gained strong support from POSCO union members.

However, the possibility of reaching an agreement within the year remains open. The poor steel market conditions and ongoing domestic and international crises could actually reduce the momentum for a strike. An industry insider said, "The steel market is weak and the external environment is worsening," adding, "It seems difficult to lead an actual strike, but by securing the right to strike, the union can increase its bargaining power."

POSCO and the domestic steel industry are in a recession due to the onslaught of low-priced Chinese products and a sharp drop in demand. On the 19th, POSCO abruptly shut down the No. 1 wire rod mill at the Pohang Steelworks, which had been operating for over 45 years, and in July, it closed the No. 1 steelmaking plant at Pohang Steelworks. These measures aim to improve profitability, which is worsening due to global steel oversupply and the influx of low-priced foreign steel products. Additionally, this month, fires broke out at the 3 Finex plant within Pohang Steelworks at two-week intervals, and recovery efforts are underway.

External risks are also increasing. With the inauguration of the second Trump administration in the U.S., tariff barriers may rise further. There is growing concern that the annual 2.63 million tons steel export quota to the U.S., which currently enjoys duty-free status, might be reduced. Tariff barriers aimed at curbing China are likely to cause steel oversupply in countries other than the U.S.