POSCO's Pohang plant in North Gyeongsang Province / Yonhap
POSCO and Samsung Electronics are struggling with protracted collective bargaining negotiations with their respective labor unions, adding greater downside risks to their efforts to navigate growing uncertainties.
According to POSCO and its leading union, the National Labor Relations Commission on Thursday decided to end its arbitration on the collective bargaining negotiations between the steelmaker's workers and management, as the two sides failed to narrow their differences.
As the commission ended its arbitration, the union, affiliated with the Federation of Korean Trade Unions, secured its lawful rights to strike, and a vote to decide whether to proceed with the collective action is scheduled for Nov. 25.
If the union decides to walk out, it will be the first such action since the company's founding in 1968. POSCO and its labor union have already experienced a similar standoff during last year's negotiations, but reached a last-minute agreement through the commission's arbitration. At that time, union members voted for a strike, but came to an agreement citing the possible impact across domestic industries.
The labor dispute is adding pressure to the company's declining profitability, compounded by fierce competition from Chinese rivals.
According to the financial statement of POSCO Holdings, which controls POSCO, its revenue from steelmaking in the third quarter of this year declined by 0.85 percent year-on-year to 15.67 trillion won ($11.19 billion), but operating profit declined by 45.37 percent to 466 billion won during the same period.
Due to a supply glut, POSCO has already shut down two mills this year, and is now seeking lead managers for its bid to sell a Chinese joint venture, POSCO Zhangjiagang Stainless Steel.
Members of the National Samsung Electronics Union stage a rally near the company's plant in Hwaseong, Gyeonggi Province, July 8. Korea Times photo by Shim Hyun-chul
Samsung Electronics is also facing challenges in wage negotiations with its labor union, the National Samsung Electronics Union (NSEU).
According to the NSEU, its members on Thursday voted down its tentative agreement with management on the 2023 and 2024 collective bargaining negotiations, after a weeklong voting session.
The union and management reached the tentative agreement on Nov. 14, nearly 10 months after wage negotiations began, combining talks for both 2023 and 2024.
The NSEU made headlines by staging Samsung's first-ever general strike in July but did not reach an agreement until August, when the negotiating rights as the representative of five labor unions in the company expired.
After regaining its rights in October, the NSEU resumed talks and reached a tentative agreement, which hikes base pay by 5.1 percent and offers 2 million voucher points that can be used for buying Samsung products for all employees.
As this tentative agreement was refused by NSEU members, the union's leadership is expected to engage in negotiations again, but industry officials said the two sides will likely fail to sign a collective bargaining agreement by the end of this year.
If negotiations stall further, the two sides may have to discuss three years' worth of wage negotiations all at once, raising concerns over the financial commitment that Samsung has to prepare.