Naver Subsidiary Faces Crisis... Initiates First Collective Bargaining Talks

Snow, a subsidiary of Naver, and Naver Webtoon are entering into wage and collective bargaining agreements (Wage and Collective Agreements) for the first time. As the headquarters' management efficiency policy leads to workforce reallocation and service reduction in subsidiaries, the need for collective bargaining has increased.

According to the IT industry on the 2nd, Naver's labor union 'Joint Statement' will start Wage and Collective Agreements with subsidiaries Snow and Naver Webtoon from this year. Previously, only Naver Cloud, which integrates the headquarters Naver and the headquarters B2B (business-to-business) personnel, conducted negotiations among business corporations.

Naver Headquarters in Seongnam, Gyeonggi. Photo by Jinhyung Kang aymsdream@

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The union expanded the scope of negotiations due to the spread of management efficiency efforts. As the headquarters tightened its belt, demands for collective bargaining increased mainly among subsidiaries affected by this.

Snow is a representative case. At the end of last year, it reallocated personnel from Cake, a subsidiary that provides an English education application (app). Due to continuous deficits over the past five years and poor business performance, it undertook organizational slimming. Half of the personnel were transferred to other affiliates such as Naver Financial, Snow, and Cream, and the existing service was maintained with minimal staff. Previously, Snow merged with Superlabs, an AI-specialized subsidiary. It was launched in April 2022 as an AI-based virtual human and content production company but was dissolved after one year and eight months.

Snow has played the role of an incubator to grow new businesses rather than generating profits for Naver. With management efficiency measures extending even to such subsidiaries, there is a growing atmosphere that unprofitable businesses or affiliates can be liquidated at any time.

Naver Webtoon is no different. As it aims for an initial public offering (IPO) this year, it has also pursued management efficiency. Last year, it liquidated the Chinese branch of its subsidiary Locus, which produces webtoon-based animations, called 'Locus Shanghai,' and the Japanese branch of the webtoon production company YLAB, 'YLAB Japan.' Naver's North American web novel subsidiary Wattpad reduced about 20 employees, 10% of its workforce, last month. This is the second round of layoffs following the dismissal of about 40 employees in March last year.

The union membership rate in these subsidiaries is also reported to be increasing. A Naver union official said, "We judged that this trend could continue as large-scale personnel reassignments are taking place in subsidiaries that do not conduct Wage and Collective Agreements," adding, "We are preparing to start negotiations with subsidiaries from this year."

In the IT industry, joint responses by unions are increasing. The IT Committee of the Korean Confederation of Trade Unions' National Chemical, Textile, and Food Industry Union, including Naver, Kakao, Nexon, NCSoft, Smilegate, Webzen, and Hancom, has decided to build an 'IT Wage and Collective Agreement Solidarity' from this year to raise their voices together. Due to the severe restructuring wave caused by the economic downturn, they plan to strengthen their bargaining power through joint responses.

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