Dispute could become first major labor-versus-labor case since Yellow Envelope Act on March 30
POSCO’s union has launched strike procedures, claiming that management is attempting to directly hire workers from subcontractor firms without prior consultation.
The POSCO union has initiated strike procedures, claiming that management is attempting to directly hire subcontractor employees without prior consultation. The backlash stems from management’s failure to offer additional compensation to existing headquarters staff.
This conflict presents a pattern completely opposite to the situation just four years ago, when the subcontractor union of Daewoo Shipbuilding & Marine Engineering, the predecessor to Hanwha Ocean, staged a ‘do-or-die sit-in’ to demand improved working conditions.
The ‘Yellow Envelope Law’ (the amendment to Articles 2 and 3 of the Trade Union and Labor Relations Adjustment Act), enacted to protect the legitimate rights of workers, has ironically triggered labor-on-labor conflict. If the situation escalates to a strike, it will mark the first instance since the implementation of the Yellow Envelope Law where a principal contractor’s union pushes back against the direct hiring of subcontracted workers.
The Federation of Korean Trade Unions POSCO union, representing POSCO’s regular employees, announced on May 11 that it would file for mediation with the National Labor Relations Commission to secure the right to strike. Prior to this, labor and management convened a joint labor-management consultative body meeting on May 6 but failed to reach an agreement.
The union requested an apology from the POSCO Holdings management regarding the direct hiring initiative and called for discussions on compensation plans, but management rejected the demand.
This development follows management’s announcement last month that it would push to directly hire approximately 7,000 on-site workers employed by subcontractors. Management made the decision to directly hire these workers to bring an end to the illegal dispatch lawsuits that have dragged on with subcontractor employees since 2011, intending to overhaul the on-site operational system.
However, the union is pushing back, arguing that management finalized the direct hiring while bypassing procedures such as building consensus, thereby raising issues of fairness with existing employees.
A POSCO official explained, “We are coordinating differences of opinion regarding the joint labor-management consultative body for direct hiring,” adding, “We plan to continue communicating with the union.” With the enforcement of the Yellow Envelope Law in March, demands from subcontractor unions for negotiations with principal contractors have been on the rise. According to data reported by the Ministry of Employment and Labor on April 30 at the Emergency Economic Headquarters Meeting and the Ministerial Meeting on Economic and International Economic Affairs, about 400 principal contractors had received negotiation demands as of April 27.
The subcontractor union at SK Hynix is demanding negotiations with the principal contractor, citing smaller performance bonuses compared to headquarters employees. Unions representing five Hyundai Motor Group affiliates have also asserted their right to negotiate with the principal contractor.
If the unions at these 400 principal contractors resort to strikes claiming reverse discrimination against subcontractor unions, management will be left with its hands tied. This creates a vicious cycle where subcontractors continually demand the exact same treatment as principal contractor employees.
Cho Dong-keun, an emeritus professor of economics at Myongji University, stated, “There must be principles in direct hiring,” adding, “It is problematic to implement it on a whim, like handing out a gift when cornered. There must be proper justification.”
He further noted, “What a union can dispute should be limited to matters concerning working conditions; it is wrong to pick a fight over management rights, such as who and how to hire.” He added, “It is deeply concerning that strikes driven by labor-on-labor conflict, stemming from a resentful attitude of not wanting to see others succeed, have continued to emerge recently.”
Jung Min-hee
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