Alphabiz - POSCO Union Enters Strike Procedures Over Direct Hiring Plan, Raising Concerns of Intra-Labor Conflict

Photo courtesy of Yonhap News

[Alpha Biz= Kim Jisun] POSCO’s labor union has initiated strike procedures, claiming that the company is attempting to directly hire employees from subcontractors without prior consultation. The move stems from the company’s failure to present additional compensation for its existing workforce.

The situation marks a stark contrast to events just four years ago, when subcontractor workers at Daewoo Shipbuilding & Marine Engineering—now Hanwha Ocean—staged a prolonged sit-in protest demanding improved treatment.

Industry observers note that the so-called “Yellow Envelope Act” (amendments to Articles 2 and 3 of the Trade Union Act), originally designed to protect workers’ rights, is now contributing to tensions between labor groups. Should the dispute escalate into a strike, it would represent the first case since the law’s enactment in which a primary contractor faces resistance from its own union over the direct hiring of subcontracted workers.

The POSCO union, affiliated with the Federation of Korean Trade Unions (FKTU), announced on May 11 that it will file for mediation with the National Labor Relations Commission to secure the legal right to strike. Earlier, on May 6, labor and management held a joint consultative meeting but failed to reach an agreement.

The union had called on management to issue an apology from POSCO Holdings executives and engage in discussions on compensation measures related to the direct hiring plan. However, the company declined these requests.

The conflict follows POSCO’s announcement last month that it plans to directly employ approximately 7,000 on-site workers currently employed by subcontractors. The company stated that the decision aims to resolve long-standing illegal dispatch lawsuits, which have been ongoing since 2011, and to streamline on-site operations through direct employment.

The union, however, argues that the company pushed forward the plan without building sufficient consensus and that the move raises fairness concerns for existing employees.

A POSCO official stated, “We are working to coordinate differing views within the joint labor-management consultative body on direct hiring and will continue to communicate with the union.”

Since the implementation of the Yellow Envelope Act in March, demands from subcontractor unions for direct negotiations with primary contractors have been increasing. According to data reported by the Ministry of Employment and Labor to an emergency economic policy meeting on April 30, as of April 27, approximately 400 primary contractors had received such negotiation requests.

Subcontractor unions at SK hynix have also demanded negotiations with the parent company, citing lower performance bonuses compared to regular employees. Similarly, unions across five affiliates of Hyundai Motor Group have called for direct bargaining with their respective parent companies.

If unions at these roughly 400 primary contractors move to strike over perceived reverse discrimination against their members, companies may face significant operational challenges. This could potentially trigger a cycle in which subcontracted workers increasingly demand treatment equal to that of regular employees.

Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)