Demands that went too farThe union of deficit-ridden Hyundai Heavy Industries last week presented its demands for this year’s collective bargaining, which were full of unrealistic and unreasonable terms with little regard for the worsening financial state and business outlook for the company.
It called for a 6.3 percent increase in base salary and 250 percent bonus regardless of individual performance, as it claimed the employees should be compensated for a pitiful salary increase in 2014 and freeze last year.
At the same time, it demanded that union members are equally represented on the disciplinary board, any transfer decisions be reviewed and approved by the joint labor-management committee, management scrap the plans for adopting the peak wage system or paying out salaries based on performance and send more than 100 unionized employees for overseas training.
The union has the right to demand higher wages and job security. But it should make demands according to the company’s conditions. Hyundai Heavy has incurred losses for nine consecutive months since the fourth quarter of 2013. Accumulated deficit nears 5 trillion won ($4.3 billion). Prospects also show little sign of improving. In the first quarter this year, it secured orders for just three new vessels worth $200 million. Ship orders have significantly slowed since the financial crisis in 2008. The Korean shipbuilding industry is in jeopardy, squeezed by cheaper Chinese rivals and revived competitiveness of Japanese companies thanks to weaker yen.
What workers should worry more about is little work and the loss of their job instead of calling for higher salaries when they are already being paid the most generously in the industry, with each on average earning 78 million won a year. If they have sense, they cannot simply call for the same number of workers to be hired when others leave the company if there is less work available. Their interference in management through the right to name an outside board member also could delay much-needed corporate restructuring.
The union must remember that it is the crew of the same boat as the employer. It cannot jump ship just because it is not happy with the way it is sailing. It must first ensure the boat reaches land safely. It must draw a lesson from the case of Allianz Life Insurance’s Korean unit, which was sold by the German life insurance company for a pitiful $3 million to a Chinese rival after it got fed up with its poor management and militant union. Without saving the company first, the workers would end up having no one to pay them.
JoongAng Ilbo, Apr. 9, Page 26