When workers at a semiconductor equipment maker walked off the job on the 22nd of last month, the company responded with a three-day lockout. The two sides had held nine rounds of formal bargaining through the previous day without narrowing their differences, and the dispute escalated into a head-on clash. The union argued the lockout was excessive because the company had suffered no actual damage, while management said it was exercising a defensive right to protect non-union employees and safeguard facilities. At a liquor maker, a labor dispute has now dragged on for more than 900 days. After a partial lockout last year led to damage suits and a public exchange of accusations, the union is demanding direct negotiations with the controlling family.
Wage negotiations are growing more rigid as a seniority-based pay structure and a bargaining system centered on company-level unions reinforce each other, labor officials said on the 8th. Under a structure in which pay accumulates with years of service, unions have a stronger incentive to concentrate their bargaining power on protecting and raising the pay of existing members. Companies, meanwhile, find it hard to concede because a single raise compounds into future labor costs. That dynamic explains why the total number of disputes is falling even as all-out confrontations, in which neither side gives ground, stand out at large workplaces. In a Seoul Economic Daily survey of 102 labor experts, including corporate labor relations executives and professors, "adversarial labor-management relations and the absence of social dialogue" was cited most often, by 21.5%, as the biggest obstacle to transforming the labor market.
Disputes are also increasingly concentrated at large workplaces. Workplaces with 1,000 or more employees accounted for 41.5% of all disputes last year, or 51 of 123 cases, up 11.2 percentage points from 30.3%, or 36 of 119 cases, in 2021, according to the Ministry of Employment and Labor.
Strikes are becoming less frequent, but when one occurs, unions now mount what amounts to an all-out effort. An in-depth workplace panel survey by the Korea Labor Institute found the probability of a strike fell to 1.3% in 2023 from 3.5% in 2021, while union member participation at struck workplaces soared to 92.9% in 2023 from 52.5% in 2017. Analysts said the shift from small-scale or partial walkouts to actions involving nearly all members could amplify production disruptions.
Wages sit at the center of the conflict. In the workplace panel survey, wage-related items as a share of stated reasons for strikes rose to 96.6% in 2021 from 63.8% in 2011, then reached 100% in 2023. Reinstatement of dismissed workers, at 76.9%, and issues involving non-regular workers — temporary and contract staff — at 79.2%, also emerged as simultaneous points of contention, tangling pay, employment and personnel questions together. Under seniority pay in particular, a wage increase does not stop at the current year but compounds into future labor costs, creating a structure in which neither side can afford to retreat at the table, observers said.
A revised union law that took effect in March is adding another variable to these rigid relations. The scope of legitimate industrial action has widened to include restructuring and layoffs decided on business grounds, and unions' liability for damages has been limited. Business groups worry that the changes could increase the impact of strikes. Another burden is that subcontractor unions can now bargain directly with prime contractors under certain conditions. As of the 14th of last month, 456 prime contractor workplaces had received bargaining demands from subcontractor unions, and 1,218 subcontractor unions representing 179,511 members had filed such demands, according to the office of Rep. Kim So-hee of the People Power Party.
In industries with strong vertical integration, disputes at large companies are also likely to spread to suppliers. Heavy wage costs at large companies already weigh on unit prices paid to suppliers and on investment capacity, and adding conflict over bargaining between prime and subcontractors could spread production disruptions across the entire industrial ecosystem. "Under company-level labor relations, the outcome of agreements at large companies often burdens the industrial ecosystem, including subcontractors," said Lee Sang-ho, president of the Korean Association of Labor and Industry. "Labor and management at large companies should shoulder social responsibility together and provide substantive support to subcontractors."
