Agenda Items to be Discussed at Collective/Wage Bargaining

In Korea, trade unions (as employee representatives) and management are engaged in collective bargaining every two years but in wage negotiation every year. Thus, as shown in <Table 6>, in odd-numbered years (2009, 2011) the statistics for collective bargaining are different from even-numbered years (2008, 2010, 2012) in terms of the length of bargaining period and the frequency. Wage bargaining sessions are scheduled at most workplaces in 2013, and as collective and wage bargaining in Korea are the key influences on overall industrial relations, employers need to plan their negotiation strategies in advance.

<Table 1> Collective Bargaining over the Past 5 Years

The Korean Metal Workers Union (KMWU) provides strategies for wage bargaining to its affiliated unions through issuing guidelines. According to these guidelines, the KMWU has urged its members to △ consider wage increases a basic labor right, △ forget the old notion “Let the company grow first, then the workers can enjoy the fruit”, and △ enhance ties with all union members. Of these principles, a sense of unity among union members is the critical factor in the success or failure of wage bargaining as it greatly influences their willingness to participate in industrial action.

For this reason, unions bring collective agreement agendas to the wage bargaining table such as retirement age, scope of workers eligible to join a trade union, and benefits for long-term employees, even though they are not wage bargaining matters. By doing so, unions aim to get the attention of union members as well as increase their wages to a greater extent. Trade unions in the financial and public corporate sectors tend to include social issues in their wage bargaining agendas to avoid criticism from the public.


What strategies do employers need for wage bargaining?


First, if a union brings up an unrelated demand during wage bargaining, the employer should not include it on the agenda.

Even though the labor union insists that working hours, work shift system and various allowances influence workers’ wage levels, these are actually related to working conditions, not wage adjustment. It is more appropriate for these issues to be excluded from wage bargaining and discussed in collective bargaining. Because employers are not obliged to accept union demands related to collective bargaining during the two-year term after collective bargaining, it is not unfair practice if an employer rejects a union’s demands related to negotiation.


Second, when labor disputes arise and an employer requests arbitration from the Labor Relations Commission, the employer needs to explain to and persuade the Commission that issues outside of wages are not subject to wage bargaining.

Trade unions often bring up irrelevant demands in wage bargaining, including, for example, reinstatement of dismissed workers. When wage negotiations fail, unions request the Labor Relations Commission (LRC) to arbitrate. However, if the Commission decides to stop arbitration, the unions often go on strike. Employers need to explain to the LRC that union demands included unrelated items in wage bargaining and this is the main reason for the failure of negotiations. The LRC can then recommend that both parties begin wage negotiations again. Strikes in response to the Commission’s administrative guidance are illegal; unions must be held legally responsible for such action.


Third, employers should be ready to persuade unions in a logical manner.

In odd-numbered years when only wage bargaining takes place, due to the fact that there is relatively little room for negotiation between labor and management, wage increases tend to be higher than those in even-numbered years. Amid slow economic growth at home and abroad, high wage hikes are likely to place more stress on business. Thus, employers are advised to bring an appropriate information to the table to persuade unions of their specific business conditions.

<Table 2> Economic Growth Rates & Agreed Wage Increases over the Past 10 Years

Fourth, employers should reject union requests for additional bargaining termed as ‘Annex to the Agreement’ or ‘Supplement to the Agreement.’

As the legal effect of agreement on these additions are the same as for the main wage agreement, it is just like allowing to include irrelevant matters in wage bargaining. According to the Ministry of Employment & Labor, during the valid term of the collective agreement, an employer is not obligated to accept union requests for supplemental agreements unless there are provisions that are missing in the collective bargaining or that need to be revised to align with legal changes.

Currently, with intensifying anti-business sentiment and a growing number of pro-labor activists positioned in the government and political community, the burden on companies is increasing. The Korean Confederation of Trade Unions (KCTU) has already announced a massive protest and struggle to add to its leverage after the inauguration of the new administration. The KMWU has also released its plans for collective bargaining this year ① submit requests for collective bargaining in mid-to-end of March ② meeting between representatives of employees and employers for centralized collective bargaining in mid-to-end of April ③ meeting between both parties for collective bargaining at branch-level in late April to early May ④ after submitting request for arbitration, a general strike in June, and is reviewing the list of requests for collective bargaining at industry-level and branch-level. Thus, employers should be firm on the acceptable items for bargaining agendas to maintain overall stability in industrial relations at workplace.

The Park Geun-hye administration took office on February 25. During the first year of the new administration, each company needs to establish stable bargaining practices based on principles and laws.