Stances Changed
Being aware of the current crisis, Korean automakers’ notoriously hard-line labor unions, which are preparing to strike, have decided to focus on pushing for negotiations with their companies.
The labor unions of Hyundai Motor and its smaller affiliate Kia Motors as well as GM Korea have unusually changed their stances to strengthen negotiations, even though they have already met the procedural requirements for a strike, such as unionized workers’ internal vote for going on strike, mediation procedure of the National Labor Relations Commission and meetings of the labor dispute committee. Industry watchers believe that the decision was influenced by a possible backlash from the public towards any potential strike and the current crisis the industry faces.
According to industry sources on July 19, Hyundai Motor’ labor union held its labor dispute committee meeting on the previous day and decided not to go on strike before the summer holiday season which starts from July 31 to August 4. Instead, it will focus on pushing through negotiations with the company by August 4. The decision was unexpected and considered rather unusual, as the labor union voted in favor of a strike on June 14 and the National Labor Relations Commission approved the labor union to go on strike on July 17. .
With Hyundai Motor’s labor union seeking to hold talks with the company before going on a strike, Kia Motors is expected to follow suit. Kia Motors’ labor union received approval of the National Labor Relations Commission for a strike on July 13 and voted in favor of a strike on the July 18. So, it is ready to go on a strike anytime after holding its labor dispute committee meeting.
However, the unexpected turnaround by Hyundai Motor’s labor union has weakened its momentum of a strike and Kia Motors’ labor union has not scheduled a meeting of the labor dispute committee yet.
Things are not much different in GM Korea. The company voted to hold a strike on July 7, received approval of the National Labor Relations Commission for a strike on July14 and held three labor dispute committee meetings but it has not announced to state a strike yet. SsangYong Motors and Renault Samsung Motors are expected to sign a new wage agreement without strike action this year.
The domestic auto industry, which was initially expected to carry out a series of strikes, has decided to change its stance due to various factors such as poor business environment and performance, low approval rate for a strike, negative public sentiment, election for union chairmen of Hyundai and Kia in September and rumors over the sale. Above all, Korean automakers’ performance in the first half of the year fell dramatically due to triple crisis – weak domestic demand, sluggish exports and decreasing production. Moreover, they are standing at a disadvantage in the competition with Chinese counterparts in the North American market, raising a sense of crisis among unionized workers.
In fact, it has shown with labor unions’ approval rate of a strike. Hyundai Motor’s 65.6 percent vote in favor of the strike was the weakest show of confidence in the past five years.
In addition, labor unions’ demand for higher wages in the face of crisis beset with internal and external troubles is attracting negative public sentiments. Hyundai and Kia Motors’ labor unions also have an election for union leaders ahead in September.
For GM Korea, the company can withdraw from Korea after selling off its assets as the veto right of the Korea Development Bank (KDB), which has a 17 percent stake in GM Korea, will expire in October. Its labor union urged the company to reveal details but the company has not revealed any details due to the fact that it was a confidential agreement between shareholders. Overall, GM Korea’s labor union should consider whether the company will run business here first rather than seeking immediate gains.