Hyundai Reaches Tentative Agreement With Union

Hyundai on Wednesday reaches a tentative agreement with the Korean Metal Workers Union after a 17-hour bargaining session that ended just hours before the union was to hold a strike vote.

The biggest hurdle in negotiations was compliance with new Korean labor law limiting the number of full-time, paid union representatives to 26. The union has 237 representatives in Hyundai plants and wanted the company to continue paying them.

Strike vote canceled.

However, the union finally backed off and agreed that the number of representatives would be reduced to 111, with Hyundai paying the salaries of only 26, as permitted by national law, and the union paying the other 85.

The agreement on wages is identical to that in the pact ratified last Friday by union workers at Hyundai’s affiliate, Kia. The KMWU sets identical wage demands in talks with all Korean auto makers.

If workers ratify the Hyundai agreement on Friday, they will receive a monthly wage increase of 93,000 won ($86), a performance bonus equal to three months’ basic pay, a special bonus of 7 million won ($6,474) and a bonus of 35 shares of common stock for settling negotiations without striking.

Approval of the deal will mark the third year Hyundai and its union have reached a collective-bargaining agreement without a strike.

Hyundai stock rose 6% following announcement of the agreement. At midday Wednesday, it had a value of 181,500 won ($168) a share, making the stock bonus worth $5,880.

The union began negotiations June 8 asking for the full KMWU formula package that included a higher monthly basic wage increase of 150,611 won ($139) and a performance bonus of 30% of 2010 net profit, prorated among the workers.

Union spokesmen say the deal reached Wednesday includes payment concessions such as a 50% hike in paid-leave allowances and bigger stipend payments for longtime employees.

Hyundai also agrees to raise the mandatory retirement age from 58 to 59.

The talks lasted 11 weeks, well beyond the expectations of both sides.

A union spokesman says employees had been notified there would be a strike vote on Wednesday, but it was canceled after the tentative agreement was reached.