Hard Collective Bargaining
The Hyundai and Kia labor unions are expected to demand at least 4.6 trillion won (US$3.5 billion) in performance-based bonuses alone in wage and collective bargaining negotiations for 2023. Many in the Korean business community are concerned that this will weaken the competitiveness of the Korean automobile industry that is competing fiercely in order to lead the way in future vehicles such as electric vehicles.
According to industry sources on June 6, Kia’s labor union will hold an extraordinary congress of delegates at Gwangmyeong Auto Land in Gyeonggi Province from 1 p.m. on June 7 to discuss their demands in this year’s wage negotiations. It will start an internal voting process on the day, finalize the demands as soon as possible, and notify the management of them.
Hyundai Motor’s labor union has finalized a record wage hike this year, including an increase of 184,900 won in the basic salary and a 900 percent bonus, and will enter into full-scale negotiations, starting with an ice-breaking meeting between labor and management on June 13. The Kia labor union has reportedly set a policy of finalizing its demands at a level similar to the Hyundai labor union.
In particular, while Hyundai’s labor union demanded 30 percent of last year’s annual net profit as performance-based bonuses, Kia’s labor union plans to do the same. Last year, Hyundai’s net profit was 7.9836 trillion won (US$6.1400 billion) and Kia’s operating profit was 7.2331 trillion won (US$5.5628 billion). Accordingly, the two labor unions’ demand for performance-based bonuses amount to 4.565 trillion won (US$3.511 billion), which breaks down into 2.3951 trillion won by the Hyundai labor union and 2.1699 trillion won by the Kia labor union.
As of the end of last year, Hyundai had about 72,000 employees and Kia about 33,000. By simple calculation, the Kia labor union will ask for about 65 million won (US$49,993) per employee in performance-based bonuses and the Hyundai labor union about 33 million won (US$25,381) per employee. Of course, the two labor unions have steadily demanded 30 percent of their companies’ net profit and operating profit as performance-based bonuses for a long time.
This year, however, things are a little different. Kia’s labor union had already staged a partial strike on May 31, following guidelines from the metalworkers’ labor union, even before their wage negotiation demands were prepared. As Kia is recording its highest sales and operating profits since its founding, the Kia labor union thinks that it will obtain what it wants this year whatever it takes, even by staging a strike.
On top of that, the Kia labor union plans to include a proposal to request the management to pay out Kia treasury shares held by the company to all labor union members at an extraordinary meeting with the consent of the members. As of the end of March this year, Kia’s treasury shares amounted to 11,071,255 shares valued at 748.9 billion won (US$576.0 million). Analysts say that the Kia labor union has come up with the idea in light of the fact that Hyundai and Kia gave each labor union member 10 and 24 shares of treasury stocks, respectively, in addition to 4 million won (US$3,076) as a one-time special performance-based bonus in February.
In addition, following the Hyundai labor union, Kia’s labor union plans to demand an extension of the employee retirement age to the year prior to the year of receiving national pensions. The labor union also plans to raise issues such as a 4.5-day workweek, new employment, and the establishment of its branch at Donghee Auto, which produces Kia’s light vehicles such as the Morning and the Ray as Kia’s outsourcing partner.