POSCO has decided to directly hire about 7,000 partner-company employees who support operations on steel mill production sites. The move is seen as an effort to reduce management uncertainty by concluding a worker status confirmation (illegal dispatch) lawsuit that partner-company in-house subcontracted workers filed in 2011 and that has dragged on for 15 years.
According to the steel industry on the 7th, POSCO has drawn up a roadmap to directly employ partner-company workers at its Pohang and Gwangyang steel mills. Under the plan, about 7,000 on-site employees belonging to partner companies will sequentially be converted to regular employees of POSCO.
Steel mills must operate equipment 24 hours a day, and because job duties vary widely across tasks, they are often run in a format where in-house employees and partner-company workers work together. POSCO has also produced steel under this kind of primary–secondary subcontracting structure.
However, through the roadmap created that day, POSCO decided to directly hire partner-company employees who handle support work directly related to operations.
POSCO has long suffered amid legal disputes with in-house subcontracted workers over their status as employees. In-house subcontracted workers at the Gwangyang steel mill filed lawsuits against POSCO twice, in 2011 and 2016, saying that "the cooperative work contracts concluded between their affiliated partner companies and POSCO are in substance labor dispatch contracts under the Act on the Protection, etc., of Dispatched Workers."
With this decision to directly hire, POSCO's chances of ending the legal dispute that has dragged on for 15 years have increased. POSCO is expected to soon proceed with formal hiring procedures for on-site partner-company workers who wish to join.
Many interpret POSCO's decision to directly hire partner-company workers as reflecting the will of POSCO Group Chair Chang In-hwa. In Aug. last year, POSCO Group announced a policy of "fundamental improvement of subcontracting issues, including multi-level subcontracting," and said it would "innovate the safety system at industrial sites through the direct hiring of partner-company employees and strengthen future steel competitiveness based on a labor-management model of mutual growth."
At the shareholders meeting held on the 24th of last month, Chair Chang said, "After the Supreme Court ruling in 2022, direct hiring has taken place, but issues regarding differences in job categories continue to be raised," and added, "If this leads to prolonged litigation, the burden on the parties will grow, so we will set the direction."
A POSCO official said, "This decision will resolve a significant portion of management uncertainty," adding, "As jobs increase in the Pohang and Gwangyang areas, it is highly likely to help revitalize the local economy."
◇ Direct hiring of subcontracted workers takes hold… Hyundai Motor and Dongkuk Steel Mill also proceed
Before POSCO, several large manufacturing companies had already been directly hiring subcontracted workers in succession.
Hyundai Motor directly hired a large number of subcontracted workers after losing the final appeal in 2010 in a worker status confirmation lawsuit filed by a production worker belonging to an in-house subcontractor. In 2012, to resolve in-house subcontracting issues, it formed a special consultative body composed of representatives of in-house subcontractors, the Hyundai Motor chapter of the Metal Workers' Union, and the subcontractors' chapter, and directly hired a total of 9,500 in-house subcontractor employees in three rounds: 4,000 in 2014, 2,000 in 2016, and 3,500 in 2017.
Dongkuk Steel Mill converted more than 1,000 employees at 20 in-house subcontractors to regular status in Jan. 2024. A Dongkuk Steel Mill official said, "Although the expense burden increased after the conversion to regular positions, a climate has formed in which workers actively engage on the shop floor, and we have seen positive effects in labor-management relations."
In the case of Hyundai Steel, it directly hires subcontracted workers through a subsidiary. The subsidiary employs 4,500 workers, and partner companies employ 2,000, as currently operated. A Hyundai Steel official explained, "Partner-company workers who did not join the subsidiary chose not to change their affiliation of their own accord."