beyondbrics

Old habits die hard. South Korean companies are bracing for tougher negotiations with their labour unions this summer as the country’s militant unionised workers seem to be returning to the bad old ways of getting their message across through strikes.

Hyundai Motor (A005380:KSC), the country’s largest automaker, failed to reach an annual wage agreement with its labour union on Wednesday before its 45,000 union members take a summer vacation, increasing the prospect of their first strike in two years.

Union members at Kia Motors (A000270:KSC), Hyundai’s affiliate, voted down a tentative wage agreement, even though the company offered record-high bonuses. Hyundai’s union leader said that the workers would take steps to strike, following their one-week holiday, unless the company makes concessions on major issues of contention such as reducing the number of full-time paid unionists.

“A strike should be our last option but at the moment the only option to punish the stubborn management seems to be a strong struggle against it,” Lee Kyun-hoon, Hyundai’s union leader, said in a statement on Friday.

Hyundai and Kia, which together rank as the world’s fifth-largest automaker, have seen rapid sales growth, in large part due to their ability to avoid any strikes for the past two years. But it’s not all good news: both companies will probably have to offer big bonuses to appease disgruntled workers this year.

Hyundai’s overseas rival General Motors had to agree to a record bonus for workers at its South Korean unit earlier this month after a partial strike led to a production loss of 9,700 vehicles.

And it is not just automakers that are suffering from renewed industrial action in Korea. British lender Standard Charted had to suspend operations at 43 branches of its South Korean unit as its workers went on strike for more than a month, the longest in the country’s banking sector, as workers demand the company drop plans to introduce a performance-based pay system.

Four union leaders flew to London last week to put pressure on StanChart’s management, while the country’s powerful umbrella union for the financial sector threatening to weigh in with a nationwide strike of all banks in September.

However, StanChart’s trouble pales compared with the long-running saga of Hanjin Heavy Industries. The shipbuilder suffered from strikes for more than six months with workers resisting a plan to lay off about 400 workers. Its labour union reached an agreement to end the strike at the end of June but about 100 workers are still protesting against the layoffs, while a labour activist named Kim Jin-suk continues her lone struggle against the company on the top of a crane, 35 metres off the ground. Kim has been on the crane for more than 200 days in its dockyard in Busan.

Even Samsung Group (A131890:KSC), the country’s most powerful conglomerate which has managed to avoid labour unrest thanks to its “no union” policy, can no longer be an exception. Several workers at Samsung Everland, the group’s de facto holding company, formed the group’s first pan-Samsung union earlier this month, challenging the group’s policy of not allowing labour unions, after multiple unions were allowed under new labour laws. Samsung has already fired one of the union members, citing a leak of confidential corporate data, which has prompted the fired worker to threaten legal action against the move.

All these incidents suggest Korea’s feisty labour unions are back. President Lee Myung-back, who has cracked down on labour unions, appears to have become a lameduck with only one year left in the office before next year’s nationwide polls.

Lee came to power with a promise to boost per capita income to $40,000 and turn South Korea into the world’s seventh largest economy.

But the slogan now sounds like a pipe dream as ongoing labour unrest threatens to erode the country’s corporate competitiveness.

Related reading:
Samsung: labour challenge, beyondbrics
Korean auto industry escapes strike action, FT
Standard Chartered faces South Korea strike, FT