Naver Z launches full strike over wage freeze at loss-making company

Naver Z escalates from partial to full strike over wage dispute

Union warns of 5-day consecutive strike next month if no deal reached

Labor strife adds pressure on IT firms already racing to keep up globally

Naver Z union members chant slogans during a partial strike at Naver 1784 in Seongnam, Gyeonggi Province, on Sept. 9. [Yonhap]

Naver Z, the operator of Naver's metaverse platform Zepeto, launched a full-day strike Wednesday — the first such action by a Naver Group affiliate since the conglomerate was established. The walkout follows a four-hour partial strike on Sept. 9, marking a sharp escalation in the labor dispute.

The union is demanding a 5.3 percent wage increase, matching raises granted at Naver's headquarters and its affiliate Snow. Management has refused, citing a net loss of nearly 49.4 billion won ($36.1 million) last year.

The prolonged labor standoff is drawing concern that it will become yet another burden for an IT company already under pressure to move fast amid intensifying global competition, compounded by a serious deterioration in its business performance.

About 120 union members — roughly 70 percent of the total membership — took part in Wednesday's full strike. If no agreement is reached, the union plans to follow up with a five-day consecutive strike beginning Oct. 18.

The dispute centers on a wage freeze. The two sides failed to reach an agreement in two rounds of mediation before the Labor Relations Commission.

In a joint statement, the union said it had demanded, during the partial strike on Sept. 9, that management rescind the unilateral wage freeze, grant the 5.3 percent increase, and have Chief Executive Kim Chang-wook provide a full accounting of the company's management crisis.

The union also raised pressure on management, saying it would send a public letter of inquiry to both CEO Kim and Naver founder Lee Hae-jin after the Chuseok holiday.

The backdrop to the dispute is Naver Z's deteriorating finances. The company posted sales of 66.3 billion won last year, down 14.4 percent from the previous year, while its operating loss came to about 49.4 billion won — extending a streak of red ink. Observers say the deep losses leave little room for wage increases.

There are also growing concerns that the labor conflict could spread from Naver Z to other Naver affiliates.

The Naver chapter of the Korean Confederation of Trade Unions (KCTU) is pushing for unified bargaining covering 16 affiliated companies, arguing that Naver itself should come to the table rather than leaving each subsidiary to negotiate separately. Naver has maintained that it has no authority to determine the working conditions of its affiliates.

The labor strife is particularly worrying for IT companies such as Naver that are racing to keep pace with global rivals. With AI technology competition moving at breakneck speed, there are fears that prolonged labor disputes could erode their competitiveness.

As aggressive moves by global players such as OpenAI and Google threaten to encroach even on the domestic market, industry observers say Korean IT firms need to respond swiftly rather than be bogged down by internal labor conflicts.

Labor disputes over wages and working conditions have flared repeatedly across South Korea's IT sector this year.

Kakao staged its first-ever partial and full strikes in June, before labor and management reached a tentative agreement. More recently, however, fresh discord has emerged over a planned corporate split.

Samsung SDS also saw its first-ever union established — launched in July as a branch of the Samsung Group's cross-company union federation — with a controversy over the restructuring of its performance-based pay system serving as the catalyst.

ko@heraldcorp.com