Samsung Heavy Industries has become the first of South Korea’s three major shipbuilders to conclude this year’s wage negotiations, bringing months of labor-management tensions to an end. The settlement is the only agreement reached so far among the three major shipbuilders, as the unions at Hanwha Ocean and HD Hyundai Heavy Industries continue to face management in standoffs marked by strikes and stalled negotiations.
The Samsung Heavy Industries Workers Council announced on Sept. 23 that a preliminary agreement had been approved in a ratification vote among 3,880 union members, with 58.78% voting in favor. A total of 3,567 members participated in the vote, with 1,467 voting against and 313 abstaining. The agreement came after more than 20 rounds of negotiations since the first formal meeting at the end of June.
Under the agreement, base pay will rise by a total of 5.2%, or 131,786 won (approximately $97), comprising a 4.5% increase of 113,842 won plus a 0.7% regular salary increment. This represents a 0.5 percentage-point increase from the initial proposal that the Workers Council rejected on Sept. 17. An incentive payment totaling 7 million won will also be provided for the wage settlement, labor-management cooperation and efforts to strengthen future competitiveness.
The performance bonus system will also be restructured to place greater emphasis on actual earnings. The calculation method for the Outperformance Incentive (OPI), previously based on 20% of Economic Value Added (EVA), will be changed to 10% of operating profit. The new system is in line with the approach used by other Samsung affiliates, including Samsung Electro-Mechanics and Samsung SDI. It will apply to this year’s results, with bonuses to be paid early next year.
The agreement also includes measures covering employee benefits and job security. The re-employment period for employees who reach the mandatory retirement age and are rehired on fixed-term contracts will be extended from one year to a “1+1 year” arrangement, allowing them to work for up to two additional years. The housing loan limit will be raised to 70 million won, while paid leave for employees with 40 years of service will be expanded to 15 days. The two sides also agreed to hire new production workers next year.
A Samsung Heavy Industries official said the negotiations were concluded based on mutual trust and respect, adding that employees would work together to improve the company’s performance and build a cooperative labor-management culture. Union members will also receive an additional special day off as part of the settlement.
The industry is watching closely to see what impact Samsung Heavy Industries’ settlement may have on stalled negotiations at other shipbuilders. Hanwha Ocean’s union is in its fourth consecutive day of a crane occupation strike, while the HD Hyundai Heavy Industries union has broadened its labor action after declaring a breakdown in negotiations, presenting a sharp contrast with the settlement at Samsung Heavy Industries.
Source: Business Korea.
