Members of the Korean Metal Workers' Union (KMWU) carry a banner in front of the Supreme Court in Seoul, Thursday, to welcome the court's ruling for POSCO to grant the status of regular employees with job security to irregular contract workers dispatched from its subcontractors. Courtesy of KMWU

By Park Jae-hyuk

Business lobby groups warned that the domestic manufacturing industry will suffer from a sharp rise in labor costs, due to the Supreme Court's latest order for POSCO to hire irregular contract workers ― who were dispatched from its subcontractors ― as its regular employees with job security.

Upholding the appellate court's ruling, the top court ruled on Thursday in favor of the workers, who filed lawsuits in 2011 and 2016 to demand the status of being regular employees from the steelmaker.

According to the Act on the Protection of Temporary Agency Workers, a company should convert dispatched contract workers who have worked for more than two years for the company into regular workers. The justice judged the workers from POSCO's subcontractors to be dispatched workers, dismissing the company's claim that they were not under its direct supervision.

The Korean Metal Workers' Union welcomed the ruling, threatening to file additional lawsuits for thousands of other irregular contract workers at POSCO so that they can also be converted into regular employees of the company.

POSCO acknowledged the Supreme Court's ruling, saying that it will take follow-up measures in compliance with the court's order.

The Korea Iron & Steel Association, where POSCO Group Chairman Choi Jeong-woo serves as the chairman, however, expressed concerns about potential negative impacts from the ruling.

"It will be inevitable that costs will rise in the steel industry, weighing on its productivity," the association said in a statement.

The Korea Enterprises Federation criticized the court for not giving enough consideration the nature and characteristics of the contracts with the subcontractors, changing the industry ecosystem and failing to see the reality of the nation's job market.

"If the court makes similar judgments, there will be negative impacts on the global competitiveness of Korean companies, as well as on the job market," the federation said in a statement.

The Federation of Korean Industries called for a revision in the nation's labor law, claiming that it does not correspond to global standards.

At this moment, Samsung Electronics, Hyundai Motor, Kia, GM Korea and Hyundai Steel are awaiting the Supreme Court's decisions on similar lawsuits. The lower courts ruled against the three carmakers, supporting irregular workers. If all companies lose in their legal disputes, they are expected collectively to spend at least 2 trillion won ($1.5 billion) on wages for their regular employees who have been converted from irregular contract workers.