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Hyundai Motor to See 1st Strike-free Year since `94

Posted December. 23, 2009 14:20,   


Hyundai Motor and its union Tuesday reached a preliminary agreement in this year’s collective bargaining over wages, with 2009 to be the company’s first strike-free year since 1994.

Labor-management relations at Korea’s top automaker had been largely confrontational since its union was formed in 1987, so the latest development is seen as a sign of change.

In return for a pay freeze, management agreed to pay the biggest bonus and incentives in the company’s history. The union will vote today whether to accept the preliminary agreement.

○ More moderate union

Chances are high that Hyundai Motor will have its first strike-free year since 1994 thanks in part to a new attitude of openness toward negotiations by Lee Kyung-hoon, chief of the Hyundai Motor branch of the Korea Metal Workers’ Union. Lee was elected on his pledges of moderation and pragmatism.

The union has ended its chronic practice of waging “militant struggle” with its postponement of discussion on the daily two-shift system, which was considered the biggest potential hurdle to this year’s negotiations, to next year.

In an unusual move, labor and management agreed on a pay freeze for the first time since the union’s establishment in 1987. They considered the state of the sluggish economy due to the global financial crisis in reaching their agreement.

In a union bulletin released on Tuesday, Lee said, “Major listed companies including Samsung, POSCO, Hyundai Heavy Industries and LG froze pay this year, though they posted huge net profits.”

The union agreed on the pay freeze in return for employment guarantees and a hefty one-time bonus considering the possible deterioration of the business environment, in which Hyundai benefited from the weak won and tax incentives for new car buyers.

This is a break from the union’s previous practice of going on strike to demand pay raises.

○ Compromise instead of strike

Critics say Hyundai Motor’s decision to pay a record bonus and incentives in return for no strikes and pay freeze is just a stop-gap measure. Labor and management agreed in their preliminary agreement on a bonus worth 300 percent of basic monthly pay; an incentive of two million won (1,700 U.S. dollars) for reaching operational goals; two million won for improving business performance; one million won (850 dollars) for encouraging strike-free collective bargaining; and 40 company shares.

In cash terms, the bonuses and incentives amount to 15 million won (12,700 dollars), two million won in basic monthly pay, and stock worth 110,000 won per share per employee.

The amount is about five million won (4,200 dollars) more than last year’s combined bonuses of 10 million won per employee (5.61 percent hike in base pay, 300 percent in bonus, plus three million won). This had been the company’s record for yearly bonuses and incentives.

Others say, however, that the company’s bonus is not necessarily hefty considering the damage Hyundai Motor has suffered from strikes. Over the past 12 years except for 1994, the company has incurred collective production losses of 1.12 million vehicles and sales losses of 11.7 trillion won (9.8 billion dollars) due to strikes.

A Hyundai source said, “The agreement on strike-free collective bargaining has allowed us to secure intangible benefits, including the prevention of massive losses we had repeatedly incurred yearly, restoration of our external credibility, and improvement of our brand image.”