POSCO Holdings' decision to directly hire approximately 7,000 on-site workers from subcontractors at its Pohang and Gwangyang steelworks is interpreted as a strategic move to end illegal dispatch lawsuits and mitigate union bargaining pressure and risks arising from the enforcement of the so-called Yellow Envelope Act. As labor-related regulations and government policies signal sweeping changes in how large corporations manage their workforces, POSCO's decision is expected to put considerable pressure on other companies as well.
Analysts widely agree that the 15-year-long illegal dispatch litigation was the decisive factor behind POSCO's move. POSCO has faced prolonged conflict over lawsuits filed by in-house subcontract workers seeking confirmation of their employment status. The workers first filed suit in 2011 and won a final ruling from the Supreme Court in 2022. The Supreme Court recognized the illegal dispatch of in-house subcontract workers and ordered POSCO to hire them directly. POSCO subsequently hired the 55 workers named in that ruling. Since then, additional subcontract workers have filed lawsuits citing the precedent. With a Supreme Court ruling on a large-scale lawsuit involving a significant number of workers scheduled for May 16, analysts say POSCO chose to preemptively end the litigation through direct hiring rather than wait for the massive financial burden and disruption that would follow a potential defeat.
The strong will of POSCO Group Chairman Jang In-hwa was also reportedly a major factor. At last month's shareholders' meeting, Jang said, "If this issue leads to prolonged litigation, the burden on the parties involved will grow, so we will settle the direction as quickly as possible." The remarks clearly signaled his intent to preemptively eliminate management risks stemming from the illegal dispatch conflict.
The employee side of POSCO's subcontractor cooperation council welcomed the decision shortly after the direct hiring plan was announced. "We welcome POSCO's magnanimous decision and expect that internal conflicts caused by prolonged litigation will be resolved," the council said.
POSCO plans to carry out formal recruitment procedures for subcontractor employees who wish to join the company. Even after the direct hiring, the company plans to continue operating follow-up programs aimed at enhancing job competency and integrating new employees into the corporate culture.
However, the company is reportedly not planning to extend direct hiring across its other affiliates.
Industry observers are closely watching whether the decision will spread to other companies. A number of firms, including Hyundai Steel, are currently embroiled in conflicts over in-house subcontractors and direct employment. "With POSCO taking the lead on direct hiring, the pressure on other companies will only intensify," an industry official said. Analysts say POSCO's case provides a powerful justification for the labor community, creating pressure that will force companies to reassess their existing workforce management systems.
Still, significant challenges remain before the decision is fully implemented. Pay gaps between existing full-time employees and newly hired workers could become a contentious issue, and the possibility of worker-versus-worker conflicts over the fairness of the hiring process cannot be ruled out.