IKEA Korea Employees Strike Over Global Wage Differences

January 13, 2021

In an interesting example of new age “employee voice”, 800 IKEA workers in Korea joined a union-led strike claiming discrimination due to unequal pay.  Their case:  Korean IKEA employees receive half the average hourly wage of IKEA employees in the United States and Europe.  

Strike seeks to equalize pay, regardless of international markets.  IKEA, the famed Swedish brand is facing multiple strikes and a possible lawsuit against its Korean operations due to accused discriminatory treatment toward local Korean staff.  The 800-person strike – constituting about one third of IKEA’s Korean workforce – went on a 3-day strike following about seven months of unsuccessful negotiations.  

As noted, the alleged unfair labor practice levied at IKEA is based on perceived unequal pay.  However, in a potentially novel argument, the IKEA Korea workers claim the 8,590 Won ($7.90) hourly rate – amounting to Korea’s national minimum wage – they receive per hour is discriminatory because it amounts to about half of what IKEA employees earn in the United States and Europe.  

Underlying issues in Korea for IKEA likely catalyst of the wage complaint: Besides the wage claim, not all is well for IKEA in Korea, potentially demonstrating a poor job at adapting to the local market.  In a potential lawsuit against IKEA Korea for unfair labor practices, the IKEA worker’s union criticized the company for the lack of benefits that other local hypermarkets provide workers, such as free meals, paid breaks and a proper system for working hours and sick leave. 

Notably, the lawsuit did not mention disparate pay treatment of Korean workers compared to EU and US workers.  The case has received support from 48 civic, social, and economic organizations many of which have scrutinized IKEA heavily after last year’s reverse discrimination controversy.  

In South Korea, supermarkets and furniture stores are subject to different obligations – both legal and voluntary - according to Korea’s Distribution Industry Development Act.  By being a furniture store, IKEA avoids being subject to more the stringent obligations of being a supermarket.  Korean economic groups, however, have argued IKEA should be classified as a supermarket because its food and delivery sales exceed furniture sales.    

Global Union involvement: Despite the actual reasons, UNI Global Union used it as an opportunity to attack the company for unequal treatment of its Korean workers.  Developments need to be monitored as global unions could ask global employers to pay its entire workforce equally regardless the locations. 

Outlook: HR Policy Global will observe this interesting development and provide more analysis as the actual claim is submitted. However, it is important for global employers to have a cohesive HR strategy for its global workforce, while following local workplace cultures and norms.