POSCO has decided to directly hire approximately 7,000 on-site workers belonging to partner companies at its Pohang and Gwangyang steel mills. This is the first case of a company proceeding with direct employment of subcontracted workers since the Yellow Envelope Law took effect last month, and it is expected to have a significant impact on the restructuring of primary-subcontractor relationships across domestic industries currently engaged in negotiations with subcontractor unions.
According to industry sources on the 7th, POSCO will announce on the 8th a roadmap for directly hiring employees of partner companies who support operations at the Pohang and Gwangyang steel mill production sites. This conversion will be carried out by directly incorporating workers as regular employees of the headquarters, rather than through subsidiaries. Accordingly, approximately 7,000 on-site partner company employees are expected to become POSCO employees in stages.
Due to the nature of steelmaking processes, POSCO must operate facilities 24 hours a day, and the significant variation in job duties between tasks has led to a primary-subcontractor structure where direct employees and partner company workers work together. Currently, an estimated 80 to 100 partner companies are operating within the Pohang and Gwangyang steel mills. POSCO has decided to directly hire on a large scale the on-site partner company employees who perform support work directly related to operations.
Behind the decision for direct employment lies management uncertainty that has grown from illegal dispatch lawsuits continuing for over 10 years. POSCO is currently involved in approximately 28 lawsuits disputing illegal dispatch status with subcontractor unions. Since the first lawsuit was filed in 2011, POSCO has suffered consecutive losses across eight rounds of litigation.
POSCO's decision is expected to increase pressure for direct employment on companies currently facing successive bargaining demands from subcontractor unions. Hyundai Steel is also under bargaining pressure from subcontractor unions demanding direct employment by headquarters, making a review of the existing subsidiary-centered labor-management system inevitable.