Civil damage claims of up to 800 billion won ($610 million) will continue to haunt the unionized subcontractors of Daewoo Shipbuilding & Marine Engineering (DSME), despite the last-minute breakthrough in management-labor talk that ended their 51-day strike, according to market watchers, Sunday.
The weeks-long impasse was broken July 22, largely because the subcontractors agreed to a lower-than-demanded wage increase and guarantees of job security in the event their employers ― partner firms of the shipbuilder ― dismiss them.
However, lacking in the much-rushed agreement was whether the shipbuilder would file a civil suit seeking about 800 billion won in damages from the strike-induced corporate losses. Also left unclear was whether and how many unionized members would be referred to the prosecution on charges of obstruction of business.
The clear absence of the two critical conditions were, according to observers, the shipbuilder’s move to seek accountability for the significant monetary and reputational damage from the collective action. The shipbuilder filed a criminal complaint against five leaders of the group of subcontractors last month, highly likely to be followed by a civil suit in the coming months. Also at play is the need to avoid criminal prosecution of key DSME executives on charges of breach of trust, a lingering risk for management certain to arise if their inaction to recover damages continues.
The shipbuilder’s 816.5 billion won losses include 646.8 billion won in sales, 142.6 billion won in fixed expenses and 27.1 billion won for overseas delivery delays.
Barely a win
The subcontractors who occupied the dockyard of the shipbuilder on Geoje Island left the premises immediately after management and labor reached an agreement on a wage increase of 4.5 percent, late Friday, as put forth earlier by management. The workers had been demanding a 30 percent increase. They demanded a bonus three times their base pay for Lunar New Year, Chuseok and summer vacation season, but ended up accepting management’s offer of a combined 1.4 million won bonus a year.
Among the thorniest remaining issues for the subcontractors and their employers is whether they can agree on workers being exempt from penalties of any kind or criminal prosecution for obstruction of business.
“The issues that remain unresolved will be something all parties involved will have to work on,” a representative of the unionized workers said.
The strike ended, but not the decades-long issue of labor risks, according to Lee In-ho, former chairman of the Korean Economics Association.
“Korea’s global reputation took a hit, as evidenced by tens of billions of won in delivery delay fees,” he said. “The longstanding labor risk can undermine the country’s recent growth momentum spurred by overseas orders.”
Source: Hellenic Shipping News