Adding Insult to Injury
Hyundai Motor Company union members opted to go on strike in the end in spite of the company’s deteriorating sales performance in the U.S. and Chinese markets.
They took a vote on July 13 and 14. 89.01% of the 50,274 members participated in the voting and approximately 65% of them voted for a strike. The union’s right to strike becomes effective on July 18. The union is planning to make its final decision on July 18. At present, the members are calling for an increase of 154,883 won in monthly base pay along with payment of 30% of the company’s net profit for 2016 as their bonus.
The union went on strike each year between 2012 and last year. During the five years, they halted production for 56 days in total. According to the management, this led to a loss of 7.3 trillion won and 342,000 units of vehicles.
This year’s strike is likely to have a particularly significant impact in that the company showed a negative growth in 18 years and its operating profit-to-sales ratio hit a 10-year low of 5.5% last year. The company’s domestic and overseas sales fell 8.2% from over 2.39 million units to about 2.19 million units between the first halves of last year and this year. Besides, its sales in China almost halved during the same period.
From 2011 to 2015, the members of the union repeatedly placed a tall order, went on strike, and obtained a substantial increase in pay. During the period, their pay increased by an annual average of 5.1% while the rate of increase was 3.3% and 2.5% for those working for Volkswagen and Toyota, respectively. The average annual salary is 93.13 million won (US$8,380), 78.41 million won (US$ and 79.61 million won for the respective companies. Nonetheless, the productivity of the South Korean automakers including Hyundai Motor Company is lower than those of non-South Korean automakers. Specifically, the output per worker of the former group is about 40% of that of Toyota and the hours per vehicle (HPV) of the former group is 26.4 whereas the figure is 24.1 for Toyota and 23.4 for GM.