A Korean unit of the Paris-based luxury goods company LVMH Group is mired in a labor dispute over pay that could halt sales of some luxury perfumes and cosmetics.

Union members of LVMH Perfumes and Cosmetics Korea, most of whom are sales people, have staged protests since its latest negotiations with management over pay and conditions failed early last week.

The company owns several high-end makeup chains, including Dior, Guerlain, and Make Up For Ever.

The union is demanding wage increases, a fixed annual bonus and reform in the way sales staff salaries vary.

“We have conceded with a proposal for a 6 percent hike to the management. That is our final proposal. We can no longer yield,” labor union leader Jeon Ha-young told The Korea Herald.

She was speaking Friday on the sidelines of the second protest rally in front of the Korean office’s headquarters in Nonhyeon-dong, southern Seoul, involving about 150 union members.

Dressed in red vests reading “Fight,” the union members, who were sitting on the sidewalk on the street, chanted slogans calling for better wages and fixed bonuses.

But the management has refused to accept the labor union’s demand, contending that this year’s sales have been sluggish due to the economic slowdown.

The sides have narrowed their differences over the adjustment of the system by which salaries vary, but they remain poles apart over the implementation of the fixed bonus.

The labor union claims that the system should be introduced to ensure job security. It is calling for an annual lump sum that will, on average, amount to a month’s base salary for each worker.

But the management said it had no plans to adopt the payment system.

“It does not make sense that the company should provide a bonus even though it is posting a loss,” said Andrew Kim, manager of human resources at LVMH Perfumes and Cosmetics Korea.

Kim also said the negotiation had not made progress since the labor union is refusing to discuss other issues until the company agrees to adopt the bonus system.

No deadline has been set by either party, but the two sides are expected to go into arbitration on a labor dispute by the government to avert a strike as early as this week.

The labor union’s protests were organized to time with the one-day visit to Seoul of Bernard Arnault, CEO and president of LVMH Group on May 17.

According to news reports, the 63-year-old CEO held a series of meetings with chiefs of the nation’s giant retailers such as Shinsegae, Hyundai and Lotte departments in an effort to inspect the business climate of the region.

LVMH Perfurmes and Cosmetics Korea was one of Korea’s offices of the global luxury giant, whose business activities include wines and spirits, fashion and leather goods, and watches and jewelry. There are about 800 workers in the company and about 650 are union members.

By Renee Park  (renee@heraldcorp.com)