Union agrees on wage deal to end threat of walkout

The management and union at Posco have reached a breakthrough deal on key issues to end their dispute and lift the threat of a strike.

Under the agreement, salaries of union members will be frozen and the retirement age will be extended to 60 years from 58, effective next year. The peak wage system, which is already in operation, will be modified to consider a worker’s capacity and output instead of their length of employment and position.

This is the first time since 2009 that the top steelmaker has frozen wages. Posco predicts it will contribute to saving 13 billion won ($11 million).

The company will distribute gift certificates for use at traditional markets to workers at Posco and its business partners. The gift certificates are intended to boost the local economy, the company explained.

“Given that the company has been going through hardship recently, both the management and labor union have made a concession to each other,” said Lee Ju-hyeong, leader of the unionized workers at Posco.

Posco’s decision contrasts some other major manufacturers that are in worse shape than the top steelmaker. Workers at tire producers, such as Hankook and Kumho, and the world’s No. 1 shipbuilder Hyundai Heavy Industries have either launched a strike or are getting ready to do so. Hyundai posted an operating loss of 3.2 trillion won last year, and its union refuses to accept the management’s offer not to raise salaries.

The top steel producer introduced a peak wage system in 2011. Under the system, the salaries of employees are gradually reduced in the years leading up to their retirement.

Under the agreement made on Wednesday, workers aged 56 will receive 90 percent of their salary, 57-year-olds will get 80 percent and those between 58 and 60 will be granted 70 percent. The peak wage system will be applied starting next year and expand to its other affiliates.

According to a recent survey by the Ministry of Labor and Employment, 46.8 percent, or 177, of 378 affiliates of the top 30 conglomerates have adopted the type of work sharing program meant to ease the joblessness problem in the older population.

The nation’s No.1 steelmaker saw increases in revenue and operating profit last year but they have recently fallen.

Posco’s second-quarter operating profit slumped to 686.3 billion won from 839.1 billion won the same period a year earlier.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]