Testing the Limits
Hyundai Motor’s labor union plans to demand a record-high wage increase in this year’s labor negotiations as global carmakers are in a race to invest in future vehicles.
According to industry sources on May 25, Hyundai Motor’s labor union is preparing this year’s wage and collective bargaining demands -- an increase of 184,900 won or US$139.48 (excluding raises based on seniority) in base salaries, 800-percent bonuses and 30 percent of the automaker’s net profit as performance-based pay -- at an extraordinary delegate meeting held the day before. Upon the finalization of the delegates’ meeting, management was notified of their demands. The labor union’s negotiations with the management will begin in June.
The base salary increase of 184,900 won which the labor union demands is 71.2 percent higher than last year’s increase of 108,000 won (US$81.44), the largest increase in the automaker’s history. This is a significant increase considering that the labor union’s basic salary demand was usually between 120,000 and 140,000 won. The labor union is also demanding an increase in bonuses in the form of monthly salaries to 800 percent from the current 750 percent. It is expected to strongly demand that 30 percent of net profits be distributed as a performance-based bonus, which has been a regular topic in wage and collective bargaining this year. Dividing 30 percent of Hyundai’s net profit (7.98 trillion won or US$6.02 billion) in 2022 by the total number of employees, about 70,000, 34 million won (US$25,640) can be given per worker as a performance-based bonus.
The labor union also plans to demand an increase in various allowances, including job and position allowances. In 2022, unions received 200 percent of their monthly salaries plus 4 million won (US$3,017) as performance-based bonuses, 1.5 million won (US$1,131) in quality improvement incentives, 100 percent of their monthly salary as an incentive for attaining the second half goal, 20 Hyundai Motor shares as a special incentive for responding to changes in the future car industry, and 250,000 won (US$188.56) traditional market gift certificates.
This year, the labor union is expected to demand more than last year. It will demand an expansion of the employee car purchase discount. Their demand is to elevate the discount rate to 24 percent for employees with 20 to 23 years of service, 27 percent for employees with 23 to 25 years of service, and 30 percent for employees with 25 or more years of service. They are also expected to demand volume production of new vehicles at Korean plants.
As of last year, the average annual salary of Hyundai’s employees stood at 150 million won (US$113,138) and that of Kia’s 112 million won (US$84,476).