Companies burdened by fulfilling employment promises amid surging wages
來源：開云體育手機app下載發布日期：2023-02-02 10:54:34 瀏覽：983
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Samsung's wage agreement to become industry benchmark
By Kim Hyun-bin
Big business groups have been making bold promises in recent years to hire large numbers of employees, mostly in response to pressure from the Moon Jae-in administration. But their pledges have come to haunt them amid soaring labor costs, according to company officials Tuesday.
All eyes are now on how wage talks will unfold between Samsung Electronics' management and its labor union. The negotiations could serve as a benchmark for future collective wage negotiations.
Major conglomerates, such as Samsung, SK, LG and Hyundai Motor, have promised to create large numbers of jobs for the next several years, but the rate of wage growth seems to exceed initial expectations.
The large-scale recruitment pledges came after President Moon Jae-in invited the heads of Samsung, SK, LG, Hyundai Motor, POSCO and KT to Cheong Wa Dae last year to ask them to create jobs for young people and play a leading role in the future of the country.
However, recent business conditions have been making it difficult for the firms to fulfill those promises.
The Korea Economic Research Institute (KERI) cited statistics released by the Ministry of Employment and Labor, which showed that the monthly wage of workers in companies with one or more employees rose last year by 17.6 percent from 2016. The average annual increase rate stood at 3.3 percent, with wages rising rapidly each year.
The statistics have unnerved the business community as the level of demand from their respective unions is expected to be high, while the results of Samsung's collective bargaining agreement is seen as having a major influence.
"The dual structure of the labor market is deepening due to the high wage level of regular workers at large companies and excessive wage increases each year, leading to social conflicts," an official from the Korea Enterprises Federation said.
Wage dispute at Samsung
Samsung promised to directly hire 40,000 people over the next three years, which is 10,000 more than in previous years. But if the company accepts the wage levels demanded by the union, the burden of employment will inevitably increase.
The average employee salary at Samsung Electronics increased 18.6 percent from 2016 to 2020.
Previously, Samsung Electronics paid special incentives to all affiliates to enhance employee satisfaction ahead of wage negotiations. But the union raised the bar, demanding annual wages to be raised by 10 million won ($8,300) for all employees and to earmark 25 percent of the annual operating profit for bonuses, drastically exceeding management's offer of a 4.5 percent wage hike.
The company could face a possible labor strike for the first time amid concerns that the wage negotiations could put a significant burden on other conglomerates.
"If Samsung, representing the business world, accepts the steep salary increase proposal, it will set an example for other companies' collective bargaining agreements," an industry official said. "The labor-management council within Samsung Electronics alone proposed a basic increase rate of 15.72 percent this year, the highest level ever. If Samsung accepts their demands, it could cut down room for investments for future growth," said an industry official familiar with the matter.
On Feb. 4, Samsung Electronics' union filed for dispute mediation with the National Labor Relations Commission. No agreement has been reached within the 10-day mediation period, and the union has been granted the right to strike.
However, representatives from the conglomerate's four unions announced Wednesday, that they were not in favor of going on strike at this moment, calling it a "last resort."
"Samsung's group-wide problems cannot be resolved simply by us going on strike," said Lee Hyun-kook, the leader of the emergency planning committee of the Nationwide Samsung Electronics Union, the largest among the four unions.
The business community already expects that this year's wage negotiations will not proceed smoothly, while Samsung Electronics needs to set a precedent. A recent survey by the Korea Employers' Federation of 151 member companies showed many respondents saying this year's collective bargaining period would be longer than last year, with 28.6 percent of respondents expecting it to be more than five months, up 10 percentage points from last year.
However, some industry officials believe Samsung's union lacks bargaining power because it was established recently.
"The union only represents less than 5 percent of the total employee pool so it does not seem like it has enough bargaining power since it is a fairly new organization," another industry official said.
The Federation of Korean Trade Unions says it will use all of its power, including possibly going on strike, if Samsung fails to meet labor demands.
"Management continues to delay its decision, a typical example of unfaithful negotiation," the union said. "We will secure the right to legally dispute, and organize greater countermeasures against management."
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