South Korean steelmaker POSCO averted a strike after the management and labor union reached a tentative agreement on this year’s wages and collective agreement.

According to the steelmaker on Tuesday, POSCO’s management and labor union, operating under the umbrella of the Federation of Korean Trade Unions, reached a tentative deal in a meeting on Monday that stretched past midnight.

Under the deal, the two sides agreed on a basic wage increase of 100,000 won ($73.91), a one-time payment of 7 million won, which includes 4 million worth of stocks and other forms of payment, and the introduction of a 4-day workweek every other week.

The agreement also includes plans to establish a task force for the introduction of performance-based pay and job-grade systems, as well as the redesign of welfare benefits.

The agreement was reached with slightly improved conditions compared to those proposed by the management before the meeting, with the one-time payment increasing to 7 million won from the initially proposed 6 million won.

“Despite challenging business conditions, we offered a higher wage increase rate compared to the previous years to expedite the settlement,” said an unnamed POSCO official.

However, the labor union’s primary demand for a 13.1 percent increase in basic wages was not accepted.

The agreement was reached amid a consensus among labor and management to avoid a strike especially during challenging times for the industry, according to industry observers.

China’s economic recovery, which significantly influences global steel demand, remains uncertain and a strike at POSCO may impact not only related industries but also shipbuilding and automobile manufacturers.

“If a key industry like a steel company were to stage a strike, it would be inevitable that shipbuilding and the automobile industry would struggle,” said an industry insider.

The potential for a strike still exists until the union’s approval through voting, which requires a majority of votes in favor of the tentative agreement.

By Choi Hyun-jae and Chang Iou-chung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]