Hyundai Steel's subcontracted worker workaround a flop all around
Hyundai Steel’s fix for its questionable employment practices is failing to quell dissatisfaction.
On Wednesday, the company created three subsidiaries — Hyundai ITC, Hyundai ISC and Hyundai IMC — to directly employee people who had been working for the company via subcontractors, an arrangement that allows companies to pay workers less and provide fewer benefits. They were to directly hire 7,000 subcontracting-firm employees.
The move came after the Ministry of Employment and Labor in February ordered Hyundai Steel to take corrective actions for illegally employing working through cutout firms.
Some firms in the manufacturing industry have outsourced labor to avoid responsibility to reduce wages paid and benefits granted, which is considered illegal based on the Act on the Protection, etc of Temporary Agency Workers.
Employees from subcontracting companies received 60 percent of the salary of Hyundai Steel workers. They now get 80 percent once directly employed as regular workers under the three subsidiaries. They will receive the same benefits as all Hyundai Steel subsidiary workers.
About 4,400 subcontractors have agreed to be hired under such conditions, but another 2,600 are refusing the offer. Those rejected the plan are mostly members of the Korean Metal Workers Union’s Hyundai Steel branch, and have been asking the company to directly employee them under Hyundai Steel, rather than at subsidiaries.
A total of 100 members of the union have been occupying the company’s steel mill in Dangjin, South Chungcheong, since Aug. 23, and 1,000 gathered to hold a rally on Tuesday.
About 160 employees have sued Hyundai Steel for the practices, and the court upheld the ruling, saying that Hyundai Steel needs to directly employ the workers. They are currently waiting for the Supreme Court ruling. Workers who used to work at the Dangjin factory have also sued and are waiting for the trial court ruling, which is expected be issued early next year.
“It's impossible to do business because they occupied the control center, a key facility in running the steel mill,” said a spokesperson for Hyundai Steel. “It’s very hard for the steel mill to operate on schedule due to the subcontractor labor union and the illegal occupation of facilities.”
According to Hyundai Steel, it created subsidiaries to hire contractors because transitioning all subcontractors to regular employees is too difficult. The number of workers employed via subcontractors account for 70 percent of all Hyundai Steel workers.
“There is no problem because the Ministry of Employment and Labor recognizes employing under subsidiaries as a legitimate method of transitioning subcontractors to full-time employment,” said a spokesperson for Hyundai Steel.
Hyundai Steel employees are also complaining, saying it’s unfair for regular workers who had to go through a more rigorous application process.
Other are concerned that what is happening at Hyundai Steel could happen elsewhere.
Incheon International Airport Corporation announced plans to upgrade 1,902 contracted security inspection officers to the permanent payroll in June last year, but there has been little progress due to conflicts between the regular and non-regular workers.
According to the Act on the Protection, outsourced contractors shouldn’t face discriminatory treatment if they engage in the same or similar types of work as regular employees. Some say the subcontractors who sued Hyundai Steel could win the case because their duties were similar to regular Hyundai Steel worker.
“There is no direct relation between airport security inspector duties and jobs of regular workers at the Incheon International Airport Corporation, and thus can be considered as a legal outsourcing method,” said a labor law specialist who wished to remain anonymous. “However, the requests of Hyundai Steel employees to become regular workers is in line with the law, and is a different problem.”
Even though companies create subsidiaries to employ subcontractors and follow ministry guidelines, conflicts will inevitably arise due to the existing labor law. In 2019, the Seoul High Court ruled that outsourcing employees to SK Telcom's subsidiary SK Planet is a form of illegal worker dispatching.
“If we don’t amend the act, similar conflicts will continue to rise and the burden for companies will grow,” said Park Ji-soon, a professor teaching law at the Graduate School of Korea University. “It’s a task that the politicians and labor organizations need to strive to solve.”
BY KANG KI-HEON, LEE TAE-HEE [email@example.com]