Amid Strike Threats
After the intense 23rd round of wage and collective bargaining negotiations on Sept. 12, Hyundai Motor and its union reached a preliminary agreement. The union had initially demanded an 184,900 won wage increase (excluding rank promotions). In response, the company offered a 101,000 won increase on Sept. 5. They eventually settled on a 4.8% wage hike, raising the base pay by 111,000 won.
A major point of contention was the performance bonus. The union’s initial demand was a performance bonus equal to 30% of the previous year’s net profit (including stocks). Ultimately, the parties settled on a 300% performance bonus plus 8 million won, a special incentive of 2.5 million won for the “Car of the Year” award, and a 100% bonus for meeting production, quality, and safety targets in the second half of 2023. Both the base wage and performance bonus mark the highest increases ever, leading to an annual salary rise of 12% compared to the previous year.
Additionally, the 2023 wage and collective bargaining agreement includes a provision for 15 company stocks and traditional market gift vouchers valued at 250,000 won. Based on the closing price on Sept. 12 (186,200 won), the stock’s value is approximately 2.8 million won.
The contentious topic of retirement age extension has been temporarily put on hold. The union proposed raising the current retirement age from 60 to 64, aligning it with the national pension age. They argued this was necessary given the many skilled senior union members. The company was hesitant, however, citing negative public sentiment. Both sides have agreed to re-evaluate this in light of potential government policy changes, societal shifts, and any legal modifications by the first half of next year.
Critics pointed out the negotiations’ failure to address the attrition of essential research staff. Focusing primarily on production-based discussions means the structure of the workforce remains stagnant. Hyundai Motor’s approach to its core research staff is lacking compared to other major corporations or IT firms, leading to a spike in staff moving to other companies. The challenge for Hyundai is balancing the retention of sought-after researchers while achieving goals in production roles where there’s an oversupply.
Consumers express concerns that this unprecedented wage and collective bargaining outcome may result in further hikes in new car prices. As per Hyundai Motor’s 2022 business report, the average domestic car sale price was 50.32 million won last year. This indicates a rise from 2021’s 47.58 million won by 2.73 million won (5.7%) and a substantial jump from 2020’s 41.82 million won by 8.49 million won (20.3%). This means car prices have surged over 20% in just two years.
In the past six months alone, car prices have soared. For the first half of this year, Hyundai Motor’s average domestic car price was 51.91 million won, an increase of about 1.6 million won in just six months. The company attributes this to factors like the sales of high-margin models like the Genesis, electric vehicles, RVs, and the impact of the Ukraine war on raw material costs.
Industry insiders believe that the successful negotiations between Hyundai Motor and its union could positively influence the broader industrial sector.
Kia’s union is at an impasse right now, demanding a wage increase of 184,900 won, a performance bonus of 30% based on operating profit, a four-day work week, paid lunch breaks, and an extension of the retirement age to 64. A significant 82.5% of Kia’s union members have voted in favor of a strike.
Hyundai Mobis declared a 7-hour partial strike on Sept. 14. Previously, Hyundai Mobis’ manufacturing subsidiaries, Motras and Unitus, initiated an 8-hour strike on Sept. 5 and 6. Kumho Tire’s union has also resolved to strike, with 79.48% supporting the move after a two-day vote on Sept. 8 and 9. In the steel sector, Hyundai Steel has also secured the right to strike.