South Korea’s shipbuilder Hanwha Ocean (formerly Daewoo Shipbuilding & Marine Engineering, DSME) announced yesterday that it has successfully reached a collective agreement with its labor union for this year. The agreement mainly includes a 117,000 won ($86.33) increase in base salary and a one-time payment of 3.7 million won ($2,730.23) as a bonus. The Hanwha Ocean labor union held a vote on November 11 and approved the agreement with 63.66 percent of the votes.
Hanwha Ocean rejected the labor union’s proposal of an 87,000 won increase in base salary and a one-time payment of 2 million won. This time, the two sides finally reached an agreement after Hanwha Ocean made a concession. The agreement removes the risk of a strike at Hanwha Ocean.
Another South Korea’s shipbuilder Samsung Heavy Industries also reached a labor-management agreement a month ago. The union accepted Samsung Industries’ offer of a 115,000 won ($84.86) increase in base salary and a one-time bonus of 3 million won ($ 2,213.70).
As of now, Samsung Heavy Industries and Hanwha Ocean have concluded a labor-management agreement, eliminating the risk of strike and allowing stable production. But unions at three shipyards owned by South Korea’s largest shipbuilder, HD Hyundai Heavy Industries, HD Hyundai Samho and HD Hyundai Mipo, have been locked in a standoff with the company since September over base wage increases.
In the 25th round of negotiations, HD Hyundai Heavy Industries proposed to increase the basic wage by 122,500 won (about $93.34, including pay raises), give out 4 million won (about $3,048.00) in bonuses and 300,000 won (about $228.60) in gift certificates, and establish a new performance bonus for non-serious accidents, etc. However, the proposal was rejected by the labor union and the suspension of negotiations was announced.
This is the second proposal made by HD Hyundai Heavy Industries to its labor union. The first proposal, which was presented on September 5, included a basic salary increase of 102,000 won (about $77.72, including raises), a 4 million won incentive bonus and performance bonus, raising the age for comprehensive medical checkups, as well as a proposal to invest 2 billion won (about $152.40) in the operation of recreational facilities, and the operation of specialized labor-management councils for the improvement of the personnel system, among other things.
South Korean media reported that the HD Hyundai Heavy Industry union has recently held 10 strikes. The union plans to hold a three-day strike from January 16 to 18, and a larger strike will be held next week if there is no progress in negotiations.
The three major South Korean shipbuilders have faced repeated strikes this year. The unions are demanding a substantial wage increase in light of recent order volumes and price increases. The three shipbuliders counter that it is difficult to raise wages significantly based on short-term performance because of the severe economic recession of the past few years.
South Korean media are concerned that the protracted labor dispute at HD Hyundai will not only cost the company potential orders, but also affect shipbuilding reliability, which is considered to be the key to maintaining the competitiveness of the South Korean shipbuilding industry.
Due to strong demand from ship owners, HD Hyundai have secured orders for 165 new ship worth a total of $18.6 billion, exceeding the annual target of $13.5 billion.
A Korean industry source said, “If the strike continues until the end of this year, massive delivery delays (of HD Hyundai) will be inevitable.” The loss of reliability will weaken the competitiveness of the Korean shipbuilding industry.
