The Supreme Court ruled 11 years after the first lawsuit was filed that the in-house subcontractor workers at POSCO’s Gwangyang Works were employees of POSCO. On the 28th, the Supreme Court 3rd Division (Chief Judge Ahn Cheol-sang and Supreme Court Justice Heung-gu Lee) confirmed the lower court judgment in favor of the plaintiff in two cases of worker status verification litigation against POSCO by workers of subcontractors who were engaged in crane transportation at Gwangyang Works on the 28th. Due to the nature of the steelmaking process, the subcontractors and POSCO have been doing organic work, and workers have been directly supervised and managed by POSCO.
On the 29th, the Hankyoreh, Kyunghyang Shinmun, Maeil Economic Daily, and Korea Economic Daily covered this news on the front page. However, on the same issue, the Hankyoreh, the Kyunghyang Shinmun, and the Maeil Business Newspaper and the Korean Economy published completely different reports and editorials.
Maekyung “shocked” by Supreme Court ruling on direct employment of POSCO subcontractors Hankyung “confusion”
POSCO in-house subcontractors filed suit for confirmation of worker status twice in 2011 and 2016. In the article on the front page of the Hankyoreh, “Those who were in charge of transport using cranes at the hot rolling, cold rolling, and plating plants of Gwangyang Works △ received work orders from POSCO to carry out crane work, and △ cooperated with the tasks of POSCO employees. It cannot be seen that the work of the company’s employees is completely separated, and △Posco claimed to be a ‘POSCO worker’, saying that it was involved in the time and attendance management and staffing of the workers of the subcontractors. Since it was in the form of a worker dispatch contract, it should be considered that POSCO directly hired plaintiffs who worked for more than two years in accordance with the Dispatch Act, which states that ‘If you have used dispatched workers for more than two years, you must directly hire them’.”
It is expected to affect similar lawsuits filed against other companies in the shipbuilding industry. The Hankyoreh said in an article on page 6 that “it is expected to affect the lawsuits of 3,558 in-house subcontractors at POSCO and Hyundai Steel (estimated by each branch of the metallurgical union), who are in the same litigation.”
The Hankyoreh continued, “The Supreme Court accepted the judgment of the second trial that ‘Posco has no choice but to control the work of subcontractors in detail due to the nature of POSCO’s steelmaking process, which has an organic flow’. In-house subcontractors, such as transporting steel sheets, are essential to the rolling process, and they have collaborated extensively with POSCO workers in various tasks. In-house subcontractors received detailed information about the day’s work plan, work order, and quantity of work through the POSCO Computerized Management System (MES) and performed the work as it was.”
In an editorial, the Kyunghyang Shinmun said, “This ruling is meaningful in that it again strikes back the long-standing practice of the manufacturing industry that has used in-house subcontractors as an illegal dispatch form. The Supreme Court ruled that in-house subcontracting was illegal dispatch in 2010, 2012, and 2015 lawsuits related to Hyundai Motor Company. . There is no way to avoid job instability caused by the economic downturn. Like the recent strike of subcontractor workers at Daewoo Shipbuilding & Marine Engineering, it can be a cause of labor-management conflict,” he pointed out.
The Kyunghyang Shinmun continued, “The problem is that companies are not interested in improving the subcontract structure despite the Supreme Court’s successive rulings. Auto parts maker Hyundai Wia, which received a final judgment by the Supreme Court in July last year, became a problem by setting up a subsidiary to support the lawsuit and then transferring workers who did not respond. “Hyundai Steel, ahead of the Supreme Court’s final verdict, was also revealed to have been preoccupied with evading legal responsibilities, such as terminating contracts with subcontractors who did not comply with the employment of subsidiaries, even though the first and second trial courts acknowledged illegal dispatch.”
The Kyunghyang Shinmun reported, “It is of concern whether the Supreme Court’s ruling on illegal dispatch of in-house subcontracts will extend to the shipbuilding industry. In 2017, a lawsuit to confirm the status of workers filed by three workers of Hyundai Heavy Industries’ partner company is awaiting a ruling by the Supreme Court. This is the first illegal dispatch lawsuit in the shipbuilding industry. Both the first and second trial courts ruled against the plaintiff,” he said.
However, the Korean economy and Maeil Business were concerned that the Supreme Court ruling would only lead to chaos for companies. On the front page of the article, the Korean economy said, “There is an observation that the direct employment of about 20,000 subcontracted workers at POSCO will be inevitable. POSCO is currently proceeding with eight similar lawsuits in the Supreme Court and the lower courts,” he said. This could put us in a situation where we have to directly hire tens of thousands of subcontractors,” he said.
In the following three-page article, the Korean economy said, “It is for this reason that there is an observation that regularization of subcontracted workers will be virtually inevitable in the future. It is estimated that hiring 20,000 POSCO subcontractors as full-time workers will cost more than 2 trillion won, assuming an average annual salary. Considering the various welfare and welfare costs, the burden of other expenses for full-time employment is expected to increase. This is because, if in-house subcontractors cannot be used and all of them become full-time employees, price competitiveness and employment flexibility will inevitably decrease,” he said, worrying companies.
He also gave examples of how Germany and Japan loosened restrictions on in-house subcontract dispatch to companies. In the article at the bottom of page 3, the Korean economy pointed out that “the business community pointed out that the domestic regulations on in-house subcontracting and dispatching were excessive compared to other manufacturing competitors such as Germany and Japan. In Germany, in-house partners are actively being used and the proportion is increasing in the overall manufacturing industry, including shipbuilding and automobiles. BMW’s Leipzig plant in Germany accounts for 57% of the use of external labor. At the Leipzig plant, there is no controversy about illegal dispatch of workers, although there is a mix of sub-contractor workers’ working locations.”
In an editorial, Maeil Business News said, “A light has fallen on POSCO, which has 18,000 in-house subcontracted workers and is in the process of 8 similar lawsuits. Although the ruling is meaningful in alleviating the dual structure of the labor market, manufacturers such as steel and shipbuilding that use subcontractors will inevitably face a ‘direct employment cost shock’, he said.
Maeil Business News Agency continued, “The controversy over illegal dispatch in the industry is not a thing of yesterday or today,” and insisted that Korea’s outdated dispatch law should be overhauled.
Maeil Business News said, “This confusion is largely due to the outdated dispatch law enacted in 1988. The Korean Dispatch Act permits dispatched work for up to two years only for 32 tasks such as cleaning and security. There are few countries that have strict restrictions on the type of dispatched business and the period of dispatch. The US, UK and Germany do not have any restrictions on dispatch work or period at all.” He added, “The outdated dispatch law must be adjusted to fit the reality so that companies do not fuss according to court decisions. The scope of the Dispatch Act, which narrowly permits only 32 tasks, should be expanded and the period of dispatch should be increased,” he said.
Population collapse that started last year, the population of 50 million will be broken by 2041
According to the ‘2021 Population and Housing Census Results’ announced by the National Statistical Office on the 28th, the total population of Korea as of November 1 last year was 51,378,000, down 91,000 (0.2%) from a year ago. The aging of the population has worsened, with one in six people aged 65 or older. The population aged 65 and over is 8.7 million, and the youth population (0-14 years old) and the working-age population (15-64 years old) are decreasing. The youth population is 6087,000. The working-age population was 36,944,000, down by 344,000 (0.9%) from a year earlier.
The Chosun Ilbo said in an article on the front page, “Korea is starting to shrink. Since the end of 2019, the “population deadcross” phenomenon has begun, in which the number of deaths exceeds the number of births, but last year is the first time that the total population has turned negative. It has been 72 years since the counting began in 1949, the year after the establishment of the government.”
The Chosun Ilbo, in an article on page 3, said, “The population of 50 million will be broken by 2041. With 49,998,000 people, the 50 million line is broken. In 2070, it is predicted that the population will drop by 25% compared to last year to 37,656,000. The number of Koreans is expected to break the 50 million mark next year (49.92 million).”
The Chosun Ilbo continued, “Experts warn that such a population crisis could lead to a fall in the growth rate. According to the Statistics Korea estimate, the ratio of the working-age population (15-64 years old) to the total population fell below 60% in 2037 (59.7%) from 71.6% last year, and then falls to less than half in 2060 (48.5%). According to the OECD’s forecast for October last year, Korea’s potential growth rate in terms of GDP per capita was 2.21% as of last year, ranking 8th out of 38 OECD countries. However, if the current population decline continues, the potential growth rate will drop to 0.62% by 2044, the last among 38 countries.”
The Chosun Ilbo said in an editorial, “House prices are rising like crazy, there are not enough good jobs for young people, and the back of private education expenses due to the failure of public education is bending over, so do young people want to get married and have children? If this fundamental problem is not addressed, the low fertility will not end no matter how much budget is spent.”
The Chosun Ilbo continued, “The aging and shrinking Republic of Korea has come sooner than expected. It’s not a problem that can be solved by paying a few extra bucks for childcare. All national policies, including jobs, housing, education, child welfare, and immigration, must be redesigned from a fertility and nurturing-friendly perspective to engage in a nationwide all-out war. If we do not delay this massive and rapid ‘population earthquake,’ the country may have no future,” he said.
