Negotiated Agreement Ends Lengthy Conflict at Nestlé Korea

Posted to the IUF website 28-Nov-2003

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Members of the Nestlé Korea Labour Union voted overwhelmingly on November 28 to approve a negotiated settlement to the bitter 145 day strike and lockout at the company's Korean facilities following an all-night bargaining session in Korea. The agreement meets the union's essential demands and members have begun returning to work.

The union took strike action in July when Nestlé rejected negotiations over the unilateral transfer of 44 employees to a newly created distribution division in a move which was widely interpreted as a prelude to subcontracting and layoffs. The company denounced the union's demand for negotiations as unwarranted interference in management prerogatives. In August, Nestlé shut its branch office in Seoul and then locked out union workers at its only manufacturing facility and at warehouse and distribution centers across the country.

Following the lockout, Nestlé Korea made well-publicized announcements to the Korean and international business press that it was considering shifting its production for the Korean market to other countries, in the first instance to China. In a letter to all employees dated September 9, 2003, Nestlé Korea CEO Sam Lee referred to instructions from Nestlé headquarters to prepare a business plan after the withdrawal of production from Korea.

Because the OECD Guidelines on Multinational Enterprises explicitly prohibit invoking the threat of production transfers as an instrument of pressure in the context of a collective bargaining dispute, the IUF and the Korean Confederation of Trade Unions, in a joint submission to the OECD's Korean National Contact Point, called on the Korean government to rectify Nestlé's breach of the Guidelines. Because Nestlé Korea repeatedly invoked the authority of Nestlé corporate headquarters in Vevey, Switzerland, the IUF also sent the Korean submission to the Swiss National Contact Point in Bern. The submission was received in both countries, and a delegation of Nestlé Korea union representatives met with the Swiss National Contact Point at IUF headquarters in Geneva last week.

The union's case was strengthened when the Chungbook Province Labour Relations Committee ruled in favor of the union on November 16. The Commission determined that Nestlé's "refusal to hold negotiations with the union and the sending of a company letter dated September 9, 2003 [in which the company threatened to move all production out of the country - IUF] are unfair and illegal labour practices." The Commission stated that Nestlé "carried out all sorts of intimidation and intervention" in the dispute and instructed the company to "immediately" enter into good faith negotiations with the union. The Commission ordered Nestlé Korea to issue "a public and written apology for committing [its] unfair labour practices."

The new collective agreement establishes a joint union-management committee to review any proposed changes to employment levels, working conditions and job classifications which might arise in the context of restructuring.

The agreement also provides for a 5.5 percent increase in wages. Nestlé Korea will drop its civil suits and other legal actions taken against the union in the course of the dispute.