If the four major companies lose the 'direct employment' case, an additional 3 trillion won in labor costs will be incurred

1 Year Since Hyundai Wia Direct Employment Supreme Court Ruling
Additional Lawsuits Could Deal Fatal Blow to Corporate Management
Concerns Over Reverse Discrimination and Labor-Labor Conflicts

[Asia Economy Reporter Kiho Sung] The reason major manufacturing companies are trembling over the Supreme Court's direct employment ruling on Hyundai Wia and similar lawsuits is due to the enormous labor costs involved. If all four major companies currently facing direct employment lawsuits lose, it is estimated that labor costs alone could approach 3 trillion won. There are concerns that if additional follow-up lawsuits continue, combined with the global economic downturn, it could deal a fatal blow to these companies.

According to the industry on the 15th, Hyundai Motor, Kia, POSCO, Hyundai Steel, and Korea GM are awaiting Supreme Court rulings in lawsuits seeking confirmation of worker status that require the direct employment of irregular workers. In particular, Hyundai Motor, Kia, Hyundai Steel, and Korea GM lost in both the first and second trials. In POSCO's case, except for the first trial of the third lawsuit, workers won up to the second trial in all lawsuits from the first to the fourth.

Since the Supreme Court ruling on Hyundai Wia in July last year, manufacturing companies have feared the aftermath. If they lose at the Supreme Court level, companies will have to directly employ thousands of irregular workers belonging to subcontractors. If the four major companies?Hyundai Motor, Kia, POSCO, and Hyundai Steel?lose all direct employment lawsuits, it is estimated that they will have to pay nearly 3 trillion won annually in costs.

The scale of irregular workers claimed by each company's labor union is largest at POSCO with 18,000 people, followed by Hyundai Steel with 7,000, Hyundai Motor with 2,000 to 3,000, and Kia with 800 to 900. Based on the average annual salary per person for each company last year, the estimated labor costs are ▲POSCO 1.962 trillion won ▲Hyundai Steel 665 billion won ▲Hyundai Motor 240 billion won ▲Kia 85.9 billion won, totaling 2.9529 trillion won. Across the entire industry, these costs are expected to snowball.

In fact, Hyundai Motor experienced a major change in 2010 when the Supreme Court ruled in favor of workers in a case involving direct employment of in-house subcontracted production workers. This was the first case where Hyundai Motor's ruling to directly employ irregular workers deemed in-house subcontracted dispatch labor illegal. Since then, Hyundai Motor directly employed 4,000 workers by 2015, 1,400 in 2016, 600 in 2017, totaling 9,179 by 2020.

During this process, Hyundai Motor's burden of labor costs and other expenses increased further. Assuming an annual salary of 94 million won per employee (based on 2012), it is estimated that Hyundai Motor has paid nearly 863 billion won solely for direct employment. Considering bonuses, welfare, and settlement fees arising from lawsuits, the total cost is expected to approach 1 trillion won.

The business community points out that while the financial losses to companies are problematic, the court rulings create a structure where other workers suffer. Last year at Hyundai Steel, labor conflicts arose between unions over the direct employment of subcontractor workers. Members of the Korean Confederation of Trade Unions opposed the hiring of irregular workers, while members of the Federation of Korean Trade Unions accepted the hiring. Additionally, regular workers who joined through competition voiced concerns that hiring under the same conditions was unfair. Because of this, when the Hyundai Steel irregular workers' branch occupied the control center, employees issued a statement demanding their evacuation.

There are also concerns that Korea applies overly strict standards to manufacturing dispatch work compared to global norms. Domestic dispatch laws prohibit dispatch in manufacturing and limit it to 32 types of work considering specialized knowledge, skills, and nature of tasks. The dispatch period is limited to a maximum of two years. Unlike Korea, major advanced countries such as Germany, Japan, the UK, and the US allow dispatch labor in virtually all types of work, including manufacturing. Hong Jong-seon, head of the Labor Standards Policy Team at the Korea Employers Federation, pointed out, "Germany and Japan recognize subcontracting and contracting themselves to enhance industrial competitiveness," adding, "Our standards are stricter compared to advanced countries, so more flexible judgment is needed."

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