Hyundai, Korea Workers’ Union Hold Emergency Talks

Hyundai President Yoon Gap-han warns many of the automaker’s suppliers would “collapse” if it accepted the Korea Metal Workers Union’s demand that it include bonus payments in calculating employees’ base wages.

In a statement issued Monday ahead of the start of two days of emergency negotiations with the KMWU’s Hyundai branch, Yoon says Hyundai’s affiliated suppliers would be pressured to follow suit if the automaker agreed to the wage-recalculation demand.

Analysts note most of Hyundai’s major parts and systems suppliers are companies with cross-ownership within the Hyundai Automotive Group. Should Hyundai’s labor costs go up inordinately, as Yoon contends, all of those suppliers would be squeezed to reduce their margins and they in turn would do likewise with their own smaller suppliers of parts, materials and services.

Hyundai’s rejection of the union’s demand has been the central issue in stalled contract negotiations that led to two 4-hour strikes staged Friday by workers at Hyundai’s and Kia’s Korean plants. The KMWU says “further industrial action” will be taken if no progress on the wage-formula issue is made during the emergency sessions.

Many analysts predict the union will call for strikes beginning Wednesday as Hyundai management continues to insist on excluding the basic-wage recalculation from negotiations.

Bonuses, which can exceed $10,000 in some years, currently are excluded from the base pay calculation, which is used to determine overtime pay and severance pay. The analysts agree the KMWU’s demand would create a substantial financial burden for the automaker, which schedules sizable amounts of overtime and would owe larger severance payments to the thousands of workers who reach retirement age each year.

The analysts say more strikes could be held until the Chuseok holiday period begins Sept. 8. Partial strikes during last year’s negotiations cost Hyundai 1.5 trillion won ($1.56 billion) in lost sales.

Both GM Korea and Ssangyong have accepted the KMWU’s basic-wage- recalculation demand and included it in their new contracts. But Yoon says those automakers will not experience nearly as much harm as Hyundai would to its cost structure and ongoing operations.

KMWU workers at Hyundai’s Kia affiliate also held 4-hour strikes on both the day and afternoon shifts Aug. 22, and like Hyundai’s  workers they also are refusing to work on weekends.