SK chemicals Site Manager- Agreed to enhance productivity without trimming the workforce for restructuring - Labor agrees to differential wage increases based on performance |
For the first time in Korea, labor union employees are now subject to wage adjustments based on business performance. Employees who previously worked for a business’s labor union are now subject to a revolutionary wage adjustment system where their wage is adjusted based on the businesses performance. They had been entitled to an automatic wage increase each year.
SK chemicals (CEO Hong, Ji-ho) has concluded its annual labor agreement aimed at practical benefits as its top management and labor union made mutual compromises. They have agree on a collective agreement that includes such key terms as: ▲ wage freezing for 2004; ▲ application of differential wage adjustment rates from 2005 based on the business performance and labor productivity of each department when the company makes a net profit; ▲ three daily shifts of four teams without a workforce increase; and ▲ guarantee of employment excluding workforce trimming for intended restructuring, including voluntary retirement. They were able to reach such a compromise as the management wanted to continue business growth while the labor wanted a guarantee of stable employment from management.
▣ Productivity Enhanced through Labor-Management Compromise
Both the management and labor of SK chemicals shared the same view of the ever-deteriorating situation in the company’s business and the economy. The two sides successfully reached a labor agreement without labor unrest through more than 10 negotiation sessions held at the company’s home office and Suwon factory over several months. Company management and labor demonstrated in and out of the company that they have agreed to one accord management based on existence and growth to achieve its business goals.
This compromise is attributable to management’s presentation of transparent and integrated data of the ever-deteriorating business conditions and to labor union members’ love of the company. In particular, the two sides both recognized that they should intelligently overcome the business difficulties as well as the serious labor disputes in similar industries. It is also attributable to the candid dialogue between the management and labor union and the company’s management principle of being oriented to human resources.
By reaching a shared view of the business conditions, the two sides agreed on the three following grand principles:
▲ wage freezing for 2004; ▲ application of differential wage adjustment rates from 2005 based on the business performance and labor productivity of each department when the company makes a net profit; ▲ introduction of three daily shifts of four teams without a workforce increase under the 40-hour week system |
Referring to the agreement, a labor union representative said, “Management and labor should share the same burdens for business success. The business is a living social organic entity that advances toward the same goal with the same mind. All SK chemicals constituents will cooperatively do their best for the existence and growth of the company.”