South Korean shipbuilder Hanwha Ocean and the Democratic Party of Korea (DPK) are working together to settle a claim for KRW47 billion (US$33 million) in damages related to a general strike in 2022 by employees of a subcontractor of Daewoo Shipbuilding and Marine Engineering (DSME; Hanwha Ocean's former operating name).
South Korean media recently reported that relevant personnel of the DPK met with Hanwha Ocean CEO Kim Hee-cheol and some of his staff to discuss the establishment of a social dialogue mechanism to resolve the issue of compensation for KRW47 billion to address losses that had occurred as a result of the strike.
The subcontractor's workers participated in a 51-day general strike in 2022, which significantly impacted production activities at DSME.
This is the first time that Hanwha Ocean has explicitly announced its participation in social dialogue.
Last February, DPK leader Lee Jae-myung met with Kim Hee-cheol and proposed a solution to the lawsuit.
In October last year, the Environment and Labour Committee of the South Korean National Assembly had also proposed that Hanwha Ocean address the issues through social dialogue, but the latter expressed reservations and said that it would first discuss the matter with its employees.
"There are many critics who believe that Hanwha Ocean's claim for KRW47 billion in damages against striking workers will threaten the workers' right to life," a DPK official said. "Since there are problems with such excessive damages, it is necessary for both employers and employees to find a solution through social dialogue."
"We are willing to actively participate in social dialogue, but we will also seek ways to address legal risks," said Kim Hee-cheol. "The company will strive to achieve a good outcome of dialogue through a win-win situation between labour and management, so as to further contribute to society and improve productivity."
Due to dissatisfaction with an announced wage increase, the labor union of a DSME subcontractor initiated a strike on June 2, 2022.
As part of their strike action, the workers occupied a very large crude carrier under construction at DSME's Yupu Shipyard for 31 consecutive days. DSME was then forced to suspend its shipbuilding activities due to the occupation.
On July 22, 2022, the two sides reached a provisional agreement on wage negotiations, and the general strike came to an end.
It is alleged that the strike led to the delay in the delivery of 12 ships, causing about KRW800 billion (US$560 million) in economic losses to DSME.
In response, in August 2022, DSME filed a claim for up to KRW47 billion in compensation against five executives of the company's subcontracted branch at Geoje.
DSME was subsequently acquired by the Hanwha Group in May 2023 and renamed Hanwha Ocean.
In October 2024, Hanwha Ocean explained to the Environment and Labour Committee of the National Assembly that it would continue to file a lawsuit for damages of KRW47 billion against the workers who participated in the strike despite the difficulty of obtaining compensation, saying that the move "has no purpose of suppressing labor unions" and that "even if there may be legal issues against management," "compensation may not be obtained."
On the day of the talks, the two sides also agreed to set up a social dialogue body with the participation of labour officials, experts and the National Assembly, and to propose solutions to the legal issues.
With the two sides initially agreeing to launch a social dialogue body, discussions on resolving the KRW47 billion lawsuit are expected to accelerate.
However, the prerequisite for the dialogue to emerge is that the 2024 collective bargaining agreement and the end of the sit-down strike must first be resolved. Hanwha Ocean said it will make every effort to help subcontractors negotiate a settlement to the extent permitted by law.