Hyundai Motor Company labor union may stage a strike refusing 10-million-won wage raise

The labor union of Hyundai Motor Company voted 73.8 percent in favor of a possible strike. Once the National Labor Relations Commission decides that there is a huge gap between the labor union and management’s stances, a legitimate strike is possible. After reaching collective agreements on wages and working conditions without disputes in 2019 and 2020 due to trade disputes between South Korea and Japan and the COVID-19 pandemic, respectively, the automaker labor union’s first strike in three years has become likely.

While management proposed to raise an employee’s wage by 11.14 million won by raising the monthly base wage by 50,000 won, but the labor union refused, requesting to raise the monthly base wage by 99,000 won and pay 30 percent of the company’s net profits as incentives to employees. The issue of retirement age extension is more contentious. While the labor union requests raising the retirement age to 64 when national pension benefits begin to be provided, management says they cannot accept it as the production of electric vehicles, which requires over 30 percent fewer production workers, is on the rise.

　

It is true that Hyundai Motor Company’s overseas sales are improving, as consumption in advanced countries is exploding after having been suppressed by COVID-19 and its new SUV models are gaining popularity. However, the automaker’s production volume decreased by 70,000 units in the first half of this year alone due to the supply shortage of semiconductors for vehicles, which is expected to continue until the first half of the next year. Popular models have a waiting period of six months or longer and inventory in U.S. dealerships is exhausted. If a strike is staged now, which is the moment that requires maximum production, the company’s sales on the rise may take a downturn.

　

The labor union’s request for retirement age extension cannot avoid criticism for disregarding rapid changes in the auto industry and solely protecting the interests of older labor union members. Leading automakers around the world are expanding investment in electric vehicles and laying off a number of employees. A natural reduction through retirement is the only option in South Korea where dismissals are difficult. Even in the survey conducted by the labor union, 51 percent voted in favor of and 49 percent voted against raising the retirement age, revealing a huge gap between older and younger workers.

According to the Korea Economic Research Institute, 1,000 South Korean workers missed 38.7 workdays per year on average due to strikes, which is and 2.2 times higher than the U.K, 5.4 times higher than the U.S., 5.8 times higher than Germany, and 193.5 times higher than Japan. In addition, the productivity of Hyundai Motor Company’s plants in South Korea is one of the worst among its plants in different countries. A strike demanding an excessive wage raise under the conditions is hard to be considered legitimate. Retirement age extension is a matter of social agreement, not to be decided by negotiations between labor and management of an individual company. The labor union and management should find a middle ground during the remaining time.