Mixed fortunes in labor talks across South Korea’s shipbuilding industry: HD Hyundai Heavy Industries nears a deal, Hanwha Ocean faces hurdles

[Financial News] This year’s labor-management negotiations at South Korea’s three shipbuilding companies are taking different courses. After Samsung Heavy Industries wrapped up wage negotiations early, HD Hyundai Heavy Industries also moved a step closer to a settlement by reaching a second tentative agreement. Hanwha Ocean, however, faces growing concern that the conflict will drag on as negotiations over regular employees’ wages and collective bargaining become intertwined with direct negotiations between the main contractor and a subcontractor union. A dispute that began over how to distribute the gains from the shipbuilding boom is unfolding differently at each company, depending on its labor-management relations.
According to industry sources on the 26th, the HD Hyundai Heavy Industries union will hold a vote among its members on the second tentative wage and collective bargaining agreement on the 27th. At their 26th round of main negotiations on the 23rd, the union and management found common ground again, 21 days after the first proposal was rejected. The agreement calls for a monthly basic-pay increase of 120,000 won (including 55,000 won in seniority-based increases), a one-time payment of 11.5 million won, 200% of contractual wages, and 300,000 welfare points.
The one-time payment was increased by 500,000 won from the first proposal, and the severance-pay calculation criteria were also adjusted following the integration with the former HD Hyundai Mipo. The parties also agreed to sign a special agreement on industrial transition in response to automation and digitalization. Union branch chief Kim Dong-ha ended his crane-top sit-in protest immediately after the agreement. Since the first tentative agreement was rejected, with 52.14% of union members voting against it, the second proposal is considered likely to pass.
Samsung Heavy Industries became the first of the three shipbuilders to conclude wage negotiations, on September 23. It agreed to raise basic pay by 131,786 won (including regular annual increases; 5.2%) and pay a 7 million won incentive. It also changed the funding basis for its excess-profit performance bonus (OPI) from 20% of economic value added (EVA) to 10% of operating profit.
At Hanwha Ocean, by contrast, disagreements between management and the regular employees’ union continue over bonus calculation criteria and the length of reemployment for employees reaching mandatory retirement age. The union is calling for greater transparency in the bonus calculation criteria and an extension of the reemployment period, among other things. Union branch chief Kim Yu-cheol has been continuing his crane-top sit-in protest since the 8th.
A bigger complication is direct bargaining with the subcontractor union. At the third round of negotiations, held on the 22nd, the two sides again failed to narrow their differences over the scope of the bargaining agenda. Management says it can negotiate only six of the subcontractor union’s 36 demands—the clauses related to safety and facilities—while the subcontractor union insists that all of its demands, including those on wages, welfare and employment, should be subject to negotiation. The fourth round is scheduled for the 29th.
[email protected] Jung Won-il Reporter