Hyundai Motor union demands higher wages on record earnings

Historically, Hyundai Motor Co.'s labor union has been among the most hardline in South Korea's corporate wage negotiations.

Despite the relatively lavish compensation for its workers, a union strike has long been a rite of passage when the summer wage talk season arrives, creating a headache for business.

Hyundai’s unionized workers, who bypassed work stoppages in the last four years, are now poised to demand higher pay and bonuses for this year, possibly heading for a collision course with management.

The carmaker’s union delegates on Wednesday discussed their demands and thrashed out a proposal to be presented to management during next month's annual wage talks.

Under the proposal, the union plans to demand a monthly base pay increase of 184,900 won ($140), up 71% from last year’s agreed hike of 108,000 won, a record high, people familiar with the matter said.

Hyundai’s unionized workers are also seeking a one-off performance pay amounting to 30% of the automaker’s 7.98 trillion won net profit last year plus a bonus of eight months’ pay.

When divided by the number of its employees, Hyundai workers would receive over 30 million won in performance pay per person if the company accepts the union’s request.

The union’s long list of demands, which would make auto workers around the world green with envy, include an increase in various allowances such as job-specific and position-based allowances, and an expansion of employee vehicle purchase discounts.

MAJOR STICKING POINTS

One of the major sticking points in Hyundai’s negotiations this year will likely be the extension of the retirement age.

The Hyundai union plans to request their retirement age to be extended from 60 to 64, just before the start of national pension benefits, sources said.

Hyundai Motor’s management has opposed the extension, which it said could lead to a rise in youth unemployment. This year, however, it will likely be one of the most contentious issues as the union is scheduled to pick a new leadership by the end of the year.

Sources said the union is also expected to demand increased work by its members to build electric vehicles and related components, including battery packs, at Korean plants – a move that would require more hiring and increased investment.

RECORD EARNINGS

The unionized workers’ long list of demands comes after Hyundai, Korea’s top carmaker, is expected to post record earnings this year.

Last month, the company posted its largest-ever quarterly profit for the first three months of the year, driven by robust sales of pricey cars.

With its first-quarter operating profit of 3.6 trillion won, Hyundai Motor became Korea’s top profit maker, pushing past the longest-reigning champion, Samsung Electronics Co.

If the trend continues, Hyundai is forecast to post record-high earnings for the entire year.

Since its founding in 1987, Hyundai’s union has staged strikes almost every year, taking a toll on its production, reputation and share price.

Faced with rising public frustration at frequent strike action in the past, the Hyundai union has gradually turned moderate. Nevertheless, its unionized workers have often been called “aristocratic” for their tall demands despite their relatively lavish compensation. 

Write to Nan-Sae Bin and Il-Gue Kim at binthere@hankyung.com

In-Soo Nam edited this article.