Hanwha Ocean and the Korean Common Democratic Party are joining forces to settle claims for 47 billion won in damages filed in response to the strike.
Hanwha Ocean Sues Workers, Participating in Social Dialogue for the First Time
Korean media reported that recently, relevant personnel from the Democratic Party met with Hanwha Ocean CEO Kim Heechul (transliteration) and his company executives to discuss the establishment of a social dialogue mechanism to resolve the issue of 47 billion won (about 33 million US dollars) in compensation for losses proposed by striking workers. These workers participated in a 51-day general strike during the Daewoo Shipbuilding & Marine Engineering (DSME) period in 2022, which had a huge impact on the shipyard’s production. This is the first time Hanwha Ocean has explicitly announced its participation in social dialog.
In February this year, Lee Jae-myung, leader of the Democratic Party of Korea, proposed to find a solution to the huge damages lawsuit when he met with Kim Heechul, CEO of Hanwha Ocean. In October last year, the Environment and Labor Committee of the National Assembly of South Korea also proposed to Hanwha Ocean to solve the problem through social dialogue, but Hanwha Ocean said that it would “discuss it” and remained reserved.
During the meeting, a member of the Democratic Party of Korea said: “Most critics believe that Hanwha Ocean’s demand for 47 billion won in damages from striking workers will threaten the workers’ right to survival. Since such excessive damages are a social problem, it is necessary for labor and management to find a solution through social dialogue.”
Kim Heechul, on the other hand, said, “We are willing to actively participate in social dialog, but will also seek ways to address legal risks. We will strive to reach a good outcome of the dialog through a win-win situation for both labor and management in order to further contribute to society and increase productivity.”
It is understood that due to dissatisfaction with the wage increase, the labor union of the DSME-era partner company (subcontracting enterprise) launched a strike on June 2, 2022, and occupied the VLCC being built at the Okpo Shipyard for 31 consecutive days from June 18 for demonstration. This is the first time that DSME has suspended its shipbuilding business since its establishment.
It was not until July 22, 2022 that the labor and management reached a temporary agreement on wage negotiations, and the 51-day strike came to an end. It is said that the strike delayed the delivery of 12 ships of DSME, causing economic losses of about 800 billion won to the shipbuilder, including but not limited to sales losses, fixed cost expenditures, delayed compensation, etc. At the same time, it seriously damaged the reputation of the Korean shipbuilding industry.
In response, DSME filed a claim for compensation of up to 47 billion won in August 2022 against five executives of the Geoje subcontracting branch. DSME was subsequently acquired by Hanwha Group in May 2023 and renamed Hanwha Ocean.
In October 2024, Hanwha Ocean explained to the National Assembly Environment and Labor Committee that it would continue to file a 47 billion won damages lawsuit against striking workers despite the difficulty in obtaining compensation. It also stated that this move “has no purpose of suppressing the union” and “even if there may be legal issues against management,” “it is possible that no compensation will be obtained.”
As strike continues, social dialogue needs to address sit-ins first
It is worth mentioning that on the day of the talks, the two sides also agreed to establish a social dialogue institution involving labor, management, experts and Congress, and to propose solutions to legal issues. However, the realization of the dialogue is contingent on first resolving the issues of the 2024 collective bargaining agreement and the end of the high-altitude sit-in strike. Hanwha Ocean said it would do everything within the law to help subcontractors reach a negotiated settlement.
At 4:00 a.m. on March 15, in front of the Hanwha Group headquarters building in Seoul, Korea, Kim Hyung-soo, a representative of subcontracted workers at the Hanwha Ocean, climbed up a 30-meter-high communication tower and began a sit-in at high altitude to demand the expansion of employment and better treatment of workers. The action marked the escalation of Hanwha Ocean’s labor dispute, which has lasted for nearly a year, into an extreme form of resistance.
South Korean media said that the high-altitude sit-in demonstration stems from the breakdown of the collective bargaining between Hanwha Ocean and labor in 2024, and is also a continuation of the 51-day strike in 2022. The Geoje Tongyeong Goseong Shipyard Subcontracting Branch of the Korean Metal Workers’ Union has repeatedly proposed expanding the employment of indefinite-term employees and increasing bonuses, but the general contractor Hanwha Ocean refused to negotiate on the grounds that it is “not a direct employer.”
In response to the high-altitude sit-in, the Korean authorities said, “Several days have passed since Kim Hyung-soo, a representative of the shipyard’s subcontracted workers, climbed a 30-meter-high communication tower and began the sit-in. As the general contractor is facing difficulties in negotiating with subcontractors on issues such as performance, we hope that the general contractor Hanwha Ocean will be able to play a role in ending the negotiations and ending the sit-in.”
Democratic Party members of the Environment and Labor Committee of the National Assembly of Korea also pointed out, “It is no exaggeration to say that the competitiveness of the shipbuilding industry depends on workers’ skills. Improving labor conditions is imperative for the future competitiveness of Hanwha Ocean, not just for momentary prosperity. Labor and management can work hand in hand.”
For its part, Hanwha Ocean stated, “The shipbuilding industry, which has been in the red for the past few years, has indeed entered a new boom. This year, we will pay more performance to suppliers who contribute to the company’s performance. However, it is difficult for the company to negotiate directly with subcontracted workers, and in the future it will make sure that performance-based financial resources bring a trickle-down effect.”