Distribution Industry Urgently Needs Performance Recovery, Now Facing Explosive Conflict with Labor Unions

Mart Industry Union Announces Wage Arrears Lawsuit Against Emart
"Mandatory Weekly Closure at Least Once"…Pressure on Department Store Industry
Duty-Free Shops with 90% Sales Drop, Conflict Over Employment Retention Fund

On the 8th at 2 PM, the Department Store Duty-Free Sales Service Union held a press conference in front of the Lotte Department Store Main Branch in Jung-gu, Seoul, urging the implementation of regular department store closures.

[Asia Economy Reporter Lee Seung-jin] The distribution industry, urgently needing a performance recovery due to the impact of the novel coronavirus infection (COVID-19), has now been hampered by discord with the labor sector.

According to the distribution industry and labor sector on the 18th, the Mart Industry Union of the Korean Confederation of Trade Unions (KCTU) plans to file a lawsuit against Emart in July for unpaid wages. It is claimed that Emart has not paid approximately 60 billion KRW in holiday work allowances to employees over the past three years. The Mart Industry Union argues that Emart violated the law when electing employee representatives to reduce the holiday work allowance, which should be paid at 150% of wages.

The Mart Industry Union stated, "It is illegal for Emart to have elected the former employee representative, chosen by about 150 store workplace representatives through an indirect election system, as the employee representative," and added, "The agreement at that time is invalid, and the holiday work allowance for the past three years should be applied retroactively and paid."

Emart has been allowing the use of one substitute holiday for holiday work and paying only 100% of wages through consultations with the employee representatives, who are the negotiation counterparts in labor-management talks. Emart said, "Since we have been negotiating with legally selected employee representatives for 20 years, the controversy over representation is meaningless."

The situation is complicated. Emart recorded a quarterly loss for the first time since its founding last year and has been struggling with poor performance in the first half of this year due to COVID-19. With concerns over a resurgence of COVID-19 and labor issues overlapping, uncertainty in the second half of the year has increased.

On the 16th, the Mart Industry Union of the Korean Confederation of Trade Unions Service Federation held a press conference at the Service Federation's main conference room in Seodaemun-gu, Seoul, claiming that Emart did not pay hundreds of millions of won in holiday work allowances.

The situation is similar in department stores and the duty-free industry. The three major department stores?Lotte, Shinsegae, and Hyundai?decided to operate with full-day work shifts throughout June without regular closing days. This measure was taken due to frequent temporary closures caused by COVID-19, which reduced the number of business days, and to address increasing inventory and growing operational losses.

In response, the Department Store Duty-Free Sales Service Union pressured, saying, "Discussions on revising the Distribution Industry Development Act are underway in the National Assembly, and there may be demands for mandatory closures more than once a week instead of just one regular closing day per month." For the department store industry, which faces difficulties opening new stores due to economic recession and various regulations, demands for mandatory closures are particularly painful.

A department store official said, "Sales sharply declined in the first half of the year, so we are temporarily operating full-day work shifts based on labor-management consultations," adding, "It is regrettable that the labor side is pressuring the management by mentioning legal revisions when we are in a situation where survival is at stake."

In the duty-free industry, where sales have plummeted by more than 90% compared to the previous year, union voices urging the use of employment retention subsidies are growing louder. The union is increasing pressure, saying, "Companies do not utilize the employment retention subsidy system because they consider the 10-30% burden they must bear as a waste." The employment retention subsidy is a system where the government supports part of the labor costs when employers facing temporary business difficulties maintain employment by implementing leave or furloughs instead of layoffs.

Regarding the recent series of situations, a distribution industry official expressed frustration. One official said, "The labor sector, which is closest to the field, should be the one that understands the industry's difficulties best," adding, "For a rebound in the second half, cooperation from the labor sector is essential, but various voices are emerging simultaneously, making the situation difficult."

Experts emphasized communication and advised seeking win-win solutions. Kim Ik-sung, Honorary President of the Korea Distribution Association (Professor at Dongduk Women’s University), said, "Ultimately, all solutions can only be achieved through dialogue," and added, "Instead of only emphasizing that both sides are struggling, concessions and decisions through extensive communication are necessary."

This content was produced with the assistance of AI translation services.