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HMM crew to go on strike, resign en masse, unsettling Korea’s trade prospects

Seafarers of South Korea’s flag sea carrier HMM Co. threaten to go on the first-ever strike in the company’s 45-year history and quit in mass, stoking concerns for the trade-reliant economy in case of disruption in the shipper responsible for nearly 20 percent of outbound shipments.

In a vote Monday attended by 434 of 453 HMM sailors, 92.1 percent of the voters voted in favor to go on a mass strike, which would be the first since the company’s inception in 1976, in disgruntlement against the lack of compensation for six-year-long wage freeze.

They also agreed to quit in mass and jump ship to Swiss-based MSC which plans to add up to 500 new vessels, enough to hire accommodate all the sailors from HMM.

Ground-based employees are also scheduled to hold a vote next week. They have already secured the rights to stage a strike after the National Labor Relations Commission gave up mediation due to stark differences with the management.

Of 1,644 HMM employees, 1,019 workers are stationed on land and 625 at sea.

The management had proposed the labor union a 5.5 percent wage hike and 100 percent of monthly pay as bonus. The union stuck to its demand for a 25 percent hike in wage and 1,200 percent in bonus. Upon gaining creditors approval since the shipper remains under state-led bailout, the management suggested to raise wage by 8 percent, incentives by 300 percent, and 200 percent bonus only to be snubbed by the union.

Due to a lengthy slump, employees on ground endured wage freeze for eight years and onboard crew six years.

A strike at the dominant shipper would devastate exporters – smaller companies hinging in short-term spot contracts greater than big companies on long-term contract amid dire shortage of container carriers.

The yard at Korea’s biggest port Busan New Port is brimmed with containers due to delay in shipments.

According to the Ministry of Maritime Affairs and Fisheries, container volume at Korean ports reached 10.51 million twenty-feet equivalent units (TEU) in the first half of the year, of which 18.4 percent was handled by HMM.

A shipping disruption caused by HMM’s strikes could further fan shipping rates.

Lee Kwan-sup, vice chairman of Korea International Trade Association, urged the two sides to resolve uncertainty by reaching an agreement as early as possible to avoid further unrest.

Since the crew left room open for additional round of negotiations, the management plans to go all-out to prevent a strike.

Industry sources noted that the management could file for mediation with the National Labor Relations Commission to earn more time for negotiations. During mediation period, workers are not allowed to go on strike.

The management in a statement urged union members to return to negotiations fearing three weeks of strike could lead to about $580 million in losses for the company.

Shares of HMM were up 4.69 percent at 39,100 won ($33.5) on Tuesday afternoon.
Source: Pulse

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