Employees reject a 450% salary increase and factory closes: “We can’t take it anymore”

Factory workers in Dangjin, South Korea have turned down a 450% wage increase amid a continuing dispute over pay and conditions. Hyundai Steel has taken the decision to temporarily close a major factory as a result.

Union officials were pushing for a bigger increase, one that would bring workers' salaries in line with that of employees at the Hyundai Motor Company. The company remained unwilling to match that level and triggered a series of strikes and a partial halt in production. It is thought that around 270,000 tons of production was lost, worth approximately 25.4 billion won ($17.5m).

Maeil Business Newspaper reports that Hyundai Steel’s proposal was to increase workers' base salary by 450%, along with a a 10 million won ($6,840) bonus and selected other incentives. However, the union flatly rejected this offer.

What’s happened to the steel industry?

The situation is further complicated by the critical state of the global steel industry, a sector that is experiencing a market slowdown. Demand for steel products, particularly steel bars used in construction, has declined sharply in South Korea due to the slowdown in the real estate sector.

At the same time China has been exporting steel at low prices, putting pressure on domestic prices. The United States has announced a 25% tariff on imported steel, further aggravating the situation for South Korean manufacturers.

Hyundai Steel’s operating profit in 2023 was 798.3 billion won ($545m), which was an alarming 51% drop compared to the previous year. This profit decline reflected the company’s economic difficulties, which also faces high production costs and narrower profit margins. According to a Hyundai Steel, the proposed bonus of 10 million won per worker, coupled with additional benefits, caused the company to go from a net profit of 47.3 billion won ($32.4m) to a deficit of about 65 billion won ($44.5m).

The temporary plant closure and growing tension between management and employees have sparked a debate over the need for more reasonable negotiation. In a statement released recently, Hyundai Steel complained that the strike action was “causing a deterioration in management due to enormous losses to the company and a decline in customer confidence.”

With the plant temporarily closed and the company’s future hanging in the balance, Hyundai Steel’s situation is increasingly uncertain. As the steel industry continues to face global and local challenges, the outcome of this dispute could have significant implications for both the company and the workers who rely on it.

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