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Samsung SVC president Choi Woo-soo and Korean Metal Workers’ Union (KMWU) Samsung SVC chapter president Na Du-sik sign an agreement at the Seoul Garden Hotel on Apr. 17 to convert around 8

An agreement reached on Apr. 17 by labor and management at Samsung Electronics Service (Samsung SVC) showed two things: Samsung backing down on its “no union” principle, and 8,000 subcontractor employees being hired directly by the company. With South Korea’s major corporations historically using indirect employment to cut costs and avoid employer responsibilities, many are viewing the two sides’ agreement on the direct hiring of so many workers as an event of great significance.

Based on the agreement reached on Apr. 17 by Samsung SVC and the Samsung SVC chapter [of the Korean Metal Workers’ Union (KMWU)], the company plans to hire partner company employees directly, holding discussions with the union and stakeholders as soon as possible on the specifics of the direct employment. The number of people indirectly employed by Samsung SVC is estimated at over 10,000, including around 8,000 appliance installation and repair technicians as well as call center workers and other support staff. The labor and management sides also reportedly discussed plans to hire the technicians directly first, after which direct employment would be extended to the support staff.

According to Ministry of Employment and Labor (MOEL) reports on types of employment as of last year, indirectly hired workers represent 19% of employees at companies with 300 workers or more, or a total of 902,000 people. The statistics did not include workers who do not “share the same workplace,” like the Samsung SVC subcontractor employees. Even so, the percentage of indirectly hired workers remains high. Despite indiscriminate indirect hiring practices consistently coming under fire for “outsourcing risk” and resulting in a proliferation of low-quality jobs, the conversion of such workers to regular status at large corporations has been slow going.

In terms of its process and outcomes, the latest agreement at Samsung SVC is seen as representing a step forward from past examples of other large corporations converting indirectly employed workers to regular status. For example, other companies have only begun taking steps to convert the workers’ status after receiving a court or MOEL labor oversight decision deeming their dispatch work hiring practices illegal. E-mart hired around 10,000 cashiers as regular workers in 2013 after an MOEL illegal employment decision; Paris Baguette accepted a plan for hiring employees as regular workers through affiliates after its own MOEL ruling. Hyundai and Kia Motors, which were on the losing side of a series of cases asking for confirmation of the employment status of subcontractor workers, drew flak for adopting a “special employment” approach to hire its existing subcontractor employees rather than converting them directly to regular status.

In contrast, Samsung SVC received a 2013 MOEL labor oversight ruling which concluded that its indirect hiring was not illegal, and the workers’ side lost in the first trial of their suit last year to have their [Samsung SVC] worker status confirmed. The latest example stands in sharp contrast with past ones in that regular worker status was granted despite the conditions not being disadvantageous to the company – and through direct employment rather than hiring by a subsidiary.

The decision appeared to be motivated by Samsung’s awareness of its limited options amid a full-scale investigation by prosecutors into allegations of union-busting operations. Indeed, while Samsung previously proposed hiring the workers to regular positions through its affiliates in the early labor-managed discussions begun on Apr. 13, sources said it adopted the plan for direct employment instead after objections from the union chapter.

“It is very positive to have a case of full-scale direct employment of workers in regular positions by labor-management agreement without a legal determination having been made,” said Catholic University of Korea professor Cho Don-moon, who serves a standing representative for the group Samsung Labor Watch.

“This has huge implications for the public sector, where irregular workers have very often been converted to regular status through affiliates,” Cho suggested.

Having regarded direct employment of workers as the chief focus of its struggle since its July 2013, the Samsung SVC chapter of KMWU still faces the additional task of discussing the detailed process and conditions for the workers’ regular employment. In the cases of some large corporations and public sector institutions, working conditions have actually declined after workers were converted to regular status.

Accordingly, the KMWU chapter has committed itself to ensuring age limit and employment security, union activity rights, and the abolition of service commission-based bonuses in the conversion process. Samsung SVC workers currently receive a fixed minimum wage combined with performance-based bonuses as commissions for repair work – which has resulted in complaints about the failure to guarantee a living wage during periods when repair demand is slack.

Samsung SVC chapter leader Na Du-sik called the agreement “a victory for indirectly employed Samsung SVC irregular workers who declared their intention to ‘change Samsung and change the world.’”

“Hopefully, [South Korea’s] 10 million irregular workers will draw courage from the battle by indirectly employed Samsung SVC irregular workers,” Na added.

Korea Labour & Society Institute director Roh Kwang-pyo said, “While the agreement could be seen as an expedient resolution to issues while [Samsung] it is being investigated for improper labor activities and other illegal practices, it’s also an outcome made possible on the foundation of a battle by indirectly employed irregular workers.”

“If, as Samsung has said, this was an agreement as an expedient for efforts to provide good-quality jobs, then hopefully it will work with civil society to develop measures for improving job quality and worker human rights not only at Samsung SVC but at all its affiliates,” Roh said.

By Park Tae-woo, staff reporter

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