The labor dispute at Kumho Tire, which forced the management to impose a lockout at its three plants, reveals the problems with the unions of many big Korean companies — they are overly protected and excessively selfish. 

It is not the first time that the nation’s second-largest tire-maker has been embroiled in a severe labor dispute. Its union is notorious for its hardline stance and the company has a long history of serious disputes that have resulted in strikes and lockouts. 

The union’s militancy and “we-only-care-about-our-paychecks” attitude did not let up even when the company was under a debt workout program between May 2010 and December last year. 

The unionists staged partial and full strikes nine times during the period, with a 2011 strike inviting a lockout from the management. No worker with common sense would dare halt work when their company is under a creditor-imposed debt restructuring program — which in reality is a last resort to avert bankruptcy.

With the help of the creditor banks, which provided rescue loans totaling about 950 billion won ($790 million), Kumho could was able to graduate from the workout program on Dec. 23 last year. 

The very next day, its union launched a strike, demanding the management make up for their “sacrifices,” including pay cuts, during the workout period. This led to a 25.6-percent pay raise, and now Kumho workers receive an average annual pay of 64 million won, higher than the industry leader Hankook Tire.

Never satisfied, the union is now demanding an 8.3 percent pay raise and performance-based bonus. It also demands 4.5 million won per worker — 1.5 million won more than that offered by the management — in return for agreeing to introduce a wage peak system in 2016. In contrast, both Hankook and Nexen have already adopted a wage peak system in preparation for the extension of the legal retirement age to 60 next year.

By all appearances, it looks like a story of a successful company in a booming industry. The reality is the opposite: Kumho’s sales in the first half of this year dropped 12 percent on-year and its operating profit plunged by 50 percent. Its ratio of operating profit to sales slipped to 6.4 percent, even behind the third player in the market — Nexen Tire.

Company officials said losses from the latest strike that began Aug. 17 amounted to 94 billion won ($78 million) and workers had to give up an average of 2.5 million won in pay for staying out of work.

The case of Kumho union, along with labor disputes at the nation’s three major shipbuilding companies — Hyundai, Daewoo and Samsung — adds to the urgency to make the ongoing work to reform the nation’s rigid labor market a success.

Like Kumho workers, the unionists at the shipyards are well paid and protected — to the extent that they are called “unions of nobles” — but they have called a joint strike Wednesday, in total disregard for the worst slump in global shipbuilding business in years.

The union of Hyundai Heavy, which staged a partial strike last Friday, is even offering gift certificates to members participating in the strike because of the low support — its Aug. 26 strike drew only 17 percent of members. This is happening at a company which posted a loss for the past seven consecutive quarters.

Korea took 57th place in the labor relations rankings of the latest IMD World Competitiveness Yearbook. It is unlikely to get a higher ranking next time round.