POSCO, South Korea's leading steelmaker, has seen its 58-year history of no strikes come to an end. The company has secured its first legal right to strike amid unresolved differences in wage and collective bargaining negotiations.
On August 18, the Central Labor Commission announced a decision to halt mediation between POSCO and its labor union. Earlier, the union had conducted a vote on collective bargaining actions, with 97.1% participation and 92.2% in favor, allowing them to legally strike.
Since beginning wage negotiations in June, POSCO and the union have held six rounds of talks without reaching an agreement. The union declared a breakdown in negotiations on July 23 and requested mediation from the Central Labor Commission.
Initially, the mediation period was set to end earlier this month, but the Commission recommended an extension, believing there was still room for additional negotiations. Both parties accepted this recommendation and continued discussions until today.
The key issues in this year's negotiations include wage increases and performance bonuses. The union is demanding a 7.1% increase in base salary, along with a 600% incentive bonus, 50 shares of employee stock ownership, five years of natural salary increases, and a 200% holiday bonus.
In contrast, management has proposed a 1.5% increase in base salary, contingent on achieving this year's target operating profit, along with a 2.5 million won incentive bonus for meeting goals. They also included proposals for expanding individual rewards, enhancing special promotions, and improving conditions for on-site employees.
However, management argues that the union's demands are excessive given the prolonged downturn in the steel industry, making it difficult to accommodate all requests. The financial resources needed to meet the union's demands are estimated at approximately 1.4 trillion won, double the amount requested last year, according to POSCO.
Despite the Commission's decision to halt mediation, this does not immediately lead to a strike. The union plans to determine specific strategies and timelines through its strike preparation committee while continuing practical discussions with management, leaving open the possibility for a dramatic compromise through further negotiations.
Since its founding in 1968, POSCO has maintained a strike-free labor relationship for 58 years. However, this year, tensions have escalated due to issues beyond wages, including the direct employment of subcontractor workers.
In April, POSCO decided to directly hire about 7,000 employees from subcontractors supporting operations at its Pohang and Gwangyang steelworks. This decision has heightened tensions as it intersects with existing production staff's interests regarding job classifications, wage systems, and treatment.
The steel industry is closely monitoring the likelihood and intensity of a potential strike. Given the ongoing challenges of oversupply from China and the rise of global protectionism, any production disruptions could significantly increase POSCO's operational burdens in the second half of the year.
POSCO supplies steel products to major domestic industries, including automotive, shipbuilding, and construction. Therefore, if a strike prolongs or production disruptions escalate, it could impact the supply of steel products to these industries.
In response to the Commission's decision, POSCO stated, "We regret that the union chose to secure the right to strike rather than seek further agreement, despite several additional discussions during the extended mediation period. The company plans to continue communicating with the union and employees about the challenging business environment."
They added, "Even if a strike occurs, we will do our utmost to ensure that it does not affect key domestic and international industries such as automotive, shipbuilding, construction, and home appliances by establishing an emergency response system."
The union emphasized, "We have fulfilled our responsibility for dialogue until the end and accepted the extension of the mediation period, providing ample time for the company to make a decision. If management continues to ignore the legitimate demands and resolve of our members, we will proceed with a phased struggle and action without wavering."
* This article has been translated by AI.
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