Hyundai Motors Cuts Year-End Bonuses

Labor unions of Hyundai Motors strongly complained after the company decided to reduce year-end incentives by 50 percent. The management of Korea’s biggest auto company announced that they will give workers 100% incentives as this year’s production fell short of goals due to illegal labor strikes.

The company, so far, has given year-end bonuses regardless of the attainment of production goals. During this year’s wage negotiations, however, the labor union and management agreed to decide the amount of incentives based on production performance.

According to the agreement reached in July, the company has to pay 150% incentives when workers produce more cars than their original goal. If the production is 95% or less than 100% of original objective, workers would get only a 100% bonus. Incentives fall to 50% when production volume is 90% to less than 95% of set goals.

“This year’s production goal was 1,767,000 units by the end of this year. While we were conducting wage negotiations, we modified the goal to 1,647,000 by reducing 120,000 units (6.8%) considering the production loss due to month-long strikes. However, the recent labor strike made workers fail to attain the production goal. So we decided to pay 100% incentives to workers,” read the document released by the company on December 28.

This year’s production totaled 1,622,000 units, 25,000 less than the modified goal. It was 98.5% of the company’s objective.

This year’s labor strikes cost 115,124 units of production, 93,882 units from a wage negotiation strike and 21,242 units from 12 ‘political strikes’ led by the Korean Confederation of Trade Unions, causing 1.59 trillion won ($1.71 bn) in production losses.

“The labor union should be held accountable for not attaining the production goal due to irresponsible strikes. An incentive system based on production performance would be maintained for the company’s sustained growth,” said the company. Hyundai has paid regular year-end bonuses since 1991 apart from 1998 when the Asian financial crisis occurred.

On the same day of company’s announcement, about a hundred labor union members including their representatives waged a demonstration in front of Hyundai’s Ulsan plant protesting against the reduced bonus.

“It is no different from smothering the labor union to reduce incentives by 50 percent even though the production goal was almost attained. We will strongly respond to the company’s decision,” thundered the labor union.

raks@donga.com