Labor relations 101

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Labor relations 101

The labor and management dispute at Kumho Tire, which raised concerns of the potential for another violent clash like the one at Ssangyong Motor, ended dramatically - in a good way.

The two sides agreed that management will withdraw its previous plan to cut jobs if union workers accept the company’s proposal to freeze wages.

It’s good news that a conflict on the verge of violence and chaos ended without devolving into calamity. This was the result of continuous open-minded talks between labor and management all the way up until the last minute, with both sides upholding the law and their own principles. Even when faced with losses caused by the strike, management kept to its principles, saying it would not accept any excessive demands.

It had been a common practice in the past for management to settle early on to avoid production losses. However, this time the attitude was different. Management made a judgement call that the company would suffer greatly in the future if it gave in to preposterous demands from the labor union, which could start a vicious, neverending cycle. At the same time, the labor union decided to follow a practical path in the face of management’s unwavering stance.

Within the union, a common understanding formed that workers should not follow the steps of their peers at Ssangyong Motor by initiating reckless actions. Such understanding contributed largely to the settlement.

Just one day after the labor union announced a full-fledged strike, the union gave up wage increases and welfare demands to protect the jobs of 690 workers.

Although management paid the price of postponing corporate restructuring, it has succeeded in getting rid of the irrational labor-management practices that have presented an obstacle in the company’s long-term development over the years. Management’s rule of “no pay during a strike” will likely have a major impact on other companies’ labor-management conflicts. This has become a precedent that stops the previous practice of paying union workers who are on strike. With this successful settlement, Kumho Tire’s workers and management team should pour all of their energy into building a productive relationship.

We expect that the lessons learned from this incident will spread to other factories and companies as well.
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