The annual labor-management negotiations are under way in the Korean auto industry, and this year includes high-stakes bartering as the unions ask for tens of thousands of dollars in bonus compensation.
held the first bargaining session with its workers union June 8, kicking off what some analysts predict could become a turbulent summer. The auto maker made it through 2009 and 2010 without strike action, and management hopes its luck will hold again.
However, the union is raising the ante this year, reportedly seeking a 7.2% wage increase and a bonus of about 8-months pay. The bonus, alone, could amount to 32 million-43 million won ($30,000-$40,000) or more per worker.
Aspokesman does not confirm worker demands, noting bargaining issues will become clear as the talks progress.
Last year, the union settled for a 4.87% wage increase, 3-months pay as a performance bonus, a one-time special bonus of 5 million won ($4,600) and 30 shares of Hyundai common stock – currently valued at 238,000 won ($220) per share.
Complicating matters is Hyundai’s response to a mandate from South Korea President Lee Myung-bak that all companies reduce the number of union executives paid for conducting union business. Companies with more than 15,000 employees are to limit paid union workers to 24 by July and 16 in 2013.
Hyundai and the union have agreed to reduce the number to 90, but the auto maker has stopped all payments because the union has not produced a list of those who are eligible to receive the money as salaried executives.
Those not paid by the company must be compensated out of union funds.
Analysts believe this will prove to be a contentious labor issue. However, Hyundai’s sister-company, Kia, successfully cut fulltime union executives from 234 to 24 last year.
Another potential bargaining issue is the anticipated union demand that Hyundai reclassify its irregular workers as fulltime employees. About one in five has a temporary status or works at assembly operations subcontracted to parts and systems suppliers.
This situation caused a 25-day shutdown last November of a key assembly line at the auto maker’s Ulsan complex and delayed production launch and delivery of the new Hyundai Accent.
The strike and occupation of the line was by temporary workers not receiving the same pay and benefits as regular workers. The union considers them to be “potential regular workers.”
Also on the table is a union demand for Hyundai to end graveyard shifts and operate production lines only during the day and evening hours that end by midnight. The number of hours per shift has not been presented to management.
Kia is not yet embroiled in contract negotiations, but a spokesman says the union still has not sorted out its own executive structure or what its demands will be.
GM Korea held its fifth round of negotiations on Tuesday, having launched its labor contract talks May 25. The auto maker faces many of the same issues confronting Hyundai, as well as those unique to its own operations.
“Our workers are asking for a wage increase of 8.9% and a bonus funded from 30% of our company’s $526 million net income for 2010,” a spokesman says.
Analysts see the bonus payout of $156 million as a potential stumbling block, noting 2010 was the first time in three years the company was able to show a profit. On a pro rata basis, the bonus formula would provide a payment of $11,143 to each of the 14,000 fulltime employees.
The union also is asking GM Korea for revisions in allowances and payment standards. One item is a demand that workers who receive special-skill pay or a special-status allowance be paid the same amount every month, even if there is a temporary plant shutdown.
A unique matter facing management is the union’s demand the Changwon production center bereclassified as the’ global homeroom for minicars, the spokesman says.
Additionally, the union wants the manufacturing complex to produce its own transmissions. This would involve shifting production of 6-speed automatics from GM Korea’s dedicated facility in Boryong to Changwon.
The union also is asking management to build an employee parking lot and a service garage so workers can have their personal vehicles repaired on plant property. Another request is for the company to build a new employee-welfare center, the spokesman tells Wards.
Among other Korean auto makers, No.4-rankedSamsung does not have a workers union.
Light-truck maker Ssangyong, recently acquired by& Mahindra of India, signed a collective bargaining agreement with its union in May that increased monthly wages a mere 70,289 won ($65) per month. However, it’s the first pay raise workers have received in the last three years.