The booming shipbuilding industry is widening the gap in wage negotiations between labor and management. With a supercycle not seen in over a decade significantly improving the performance of shipbuilders, companies are struggling to reach agreements even when offering record-high compensation packages.
According to the shipbuilding industry on October 5, the HD Hyundai Heavy Industries union conducted a vote on a tentative agreement for this year's wages and collective bargaining on October 2, resulting in a rejection with 52.14% voting against it. Out of 8,100 total union members, 7,541 participated in the vote, with 47.58% in favor. The two sides are expected to coordinate a timeline for renegotiations after October 6.
The rejected tentative agreement included a monthly base salary increase of 120,000 won, a one-time payment of 11 million won, and performance bonuses. It also proposed expanding maternity leave and increasing rewards for long-term employees, as well as hiring new production technicians.
The company estimated that the total impact of the base salary increase, one-time payment, and performance bonuses would average 40.56 million won per member, which is 10.61 million won higher than last year's negotiations and represents the highest level of compensation offered by the company.
The main point of contention between labor and management has been the 'compensation method.' The union has demanded an increase in fixed salaries and a profit-sharing plan that allocates at least 30% of the company's operating profit to base salaries, performance bonuses, and allowances. In contrast, the company prefers to use variable compensation methods, such as performance bonuses and incentives, which can be adjusted based on performance rather than significantly increasing fixed salaries.
From the company's perspective, expanding fixed salaries poses a burden, as it would create fixed costs that are difficult to reduce during economic downturns. The company also finds it challenging to directly link a percentage of operating profit to compensation. If the union's demand for '30% of operating profit' were simply applied to the company's projected operating profit, the profit-sharing fund could exceed 1 trillion won, surpassing the company's planned annual capital investment of 964 billion won.
If the profit-sharing fund exceeds 1 trillion won, it could hinder the company's ability to make large-scale investments necessary for securing future growth. Last month, the company announced plans to invest a total of 1.072 trillion won in production facilities related to power engines and small modular reactors (SMRs). This indicates that cash secured during the boom must be reinvested not only in labor costs but also in expanding production capacity and future opportunities to maintain competitive bidding.
Hanwha Ocean is also continuing negotiations regarding base salary and performance bonus criteria. The union is demanding an increase of 149,600 won in base salary, an expansion of bonuses, and improvements to the performance bonus system, while the company has proposed a 100,000 won increase in base salary, a one-time payment of 6.5 million won, and annual welfare points worth 1 million won. Although they recently shifted to intensive negotiations, no agreement has yet been reached.
In contrast, Samsung Heavy Industries agreed last month to increase the base salary by 131,786 won, including regular increments, and to pay a total of 7 million won in incentives. They also changed the excess profit incentive (OPI) fund from 20% of economic value added (EVA) to 10% of operating profit, becoming the first among the big three shipbuilders to conclude wage negotiations.
A shipbuilding industry official stated, "At this critical juncture for preparing for future markets, unrealistic demands can only become a burden. Collaboration between labor and management to secure future competitiveness is more urgent than ever."
* This article has been translated by AI.
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