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The Secret of Taihan Electric’s Success

Posted January. 18, 2006 03:00,   


Last December 26, Taihan Electric Wire agreed to increase the retirement age of its production workers on the salary peak system (currently about 300) from 57 to 59 in an agreement between workers and management.

This is worth noting at a time when uncertainties over employment loom large and retirement ages are coming earlier.

In addition, the company is offering other perks, like a salary peak system, employee stock ownership, and full corporate authority over wage negotiations.

“Mutual benefits for the management and the labor” –

Cho Byung-chul (55), the captain of the labor union at Taihan Electric Wire, said on January 17 in a telephone interview with the Dong-A Ilbo, “The labor union history of Taihan Electric Wire has been mutually beneficial rather than a struggle.”

The electric business, the main business of the company, is sluggish. In the aftermath of the 1997 financial crisis, the cost burden has intensified with the latecomers such as China catching up fast.

This crisis turned out to be a new opportunity for Taihan Electric Wire, however, which agreed to the idea of “surviving together, albeit in difficulties and shortages, instead of collapsing due to fighting.”

In August 2003, the labor union suggested the introduction of a salary peak system for production workers in which one’s retirement age is guaranteed, but at a certain age, incomes are gradually reduced.

The company, which had been thinking of an additional restructuring, willingly accepted it, becoming the first manufacturer to adopt such a system.

Last May, the labor union transferred wage negotiation authority to the management for five years. And the company introduced an employee stock ownership in which it buys its company stocks and gives about 900 employees the stocks amounting to about half their annual salary.

Following that, the retirement age of the workers on the salary peak system has been extended by two years.

Higher growth and more stable employment –

Last year marked the 50th anniversary of Taihan Electric Wire, which has always its paid monthly wages on time. Employees’ strong corporate loyalty and favorable management and labor relations have kept the company in the black for 50 consecutive years.

The retirement age extension agreement is the result of the company’s accepting the labor union requirement of stable employment.

The company explains the extension was made possible thanks to the continuous efforts for restructuring and cost reduction, however.

One official at Taihan Electric Wire said the company has “’killed two birds with one stone,” meaning it has achieved both corporate growth and stable employment.”

Sang-Rok Lee myzodan@donga.com