Should Hyundai’s labor costs go up inordinately by accepting the union’s wage-recalculation demand, suppliers would be squeezed to cut their margins and they would do likewise with their own smaller suppliers of parts, materials and services.
The KMWU says on its website it had no choice but to call a strike as Hyundai negotiators would not budge on any of the union’s major proposals, including the key demand the automaker include bonus payments in calculating basic wages.
Analysts note that while this week’s expected verdicts are subject to a lengthy appeal process, rulings in favor of the workers will have a resounding effect throughout not only Korea’s automotive industry but also the entire manufacturing sector.
Ssangyong’s offer would substantially hike payments for overtime, holiday work and severance packages at retirement. But analysts say the low-volume automaker is on the threshold of a turnaround and a strike would destroy the momentum.
Workers at GM Korea and Renault Samsung have voted to authorize strikes, and their counterparts at Hyundai, Kia and Ssangyong threaten to walk out to underscore their demands for wage increases, wage reform and other changes.
Besides economy and performance, there also is the prestige factor. Bragging rights are a strong feature of Korean culture and the domestic diesels approach the status of the coveted German imports that mostly are diesel-powered.
While both Hyundai and Kia forecast sluggish markets that will limit growth for 2014, and report operating and net income was down in 2013, union negotiators likely will not perceive them to be in dire straits.
Under the agreement, Chongqing will provide tax breaks and other incentives for the plant, Beijing Hyundai’s fourth in the country. Construction could begin late this year, with production launching in 2016.
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