Hyundai Talks Stall as Union Heads Toward Election

An unusual wrinkle has been added to wage negotiations at Hyundai in Seoul.

In the midst of protracted labor and management wage talks that began June 2, terms of office of leadership for the Hyundai branch of the Korea Metal Workers Union have expired, and officials no longer are able to represent members legally at the negotiating table.

A Hyundai source tells WardsAuto that before negotiations can continue on an official basis, new leadership must be elected. This will take until the end of November, probably with wage talks not resuming until December, when the election of the fresh slate of union leaders is ratified.

The extended negotiation process is unprecedented, with talks now headed into a seventh month, and possibly even spilling into January if the new union leaders buck what has been achieved so far and stonewall on some of management’s basic demands.

Insiders say there is no problem with the union wage demand and that the company has made a realistic offer in that regard.

However, whether the new union leadership will agree to go along with management’s insistence on putting a wage-peak system into effect is unclear.

On direct orders of Chairman Chung Mong-koo, all of the principal affiliated companies in the Hyundai Motor Group currently are working on formulas to convert to the wage-peak system for 2016. This includes Kia, which refuses to divulge where it stands with its labor union, except to acknowledge that in September the union approved potential strike action.

Kia workers, however, have remained on the job without applying strike pressure, and all plants are operating on regular shifts.

Under the wage-peak system, long-term employees would have their pay incrementally reduced once they reach a certain age, but would continue to be employed until they reach the contracted or nationally mandated retirement age.

Both the wage-peak system and retirement age have been contentious matters during talks so far. The union, under orders from its umbrella leadership at the KMWU, is strongly opposed to a wage-peak system and is demanding the retirement age be increased to 65, as opposed to the federal mandate to increase it by two years to age 60.

A corollary of the wage-peak system endorsed by the Federation of Korean Trade Unions is a feature that gives company management the right to discharge or discipline underperforming workers without union approval.

In recent days, the government of South Korea’s president Park Geun-hye has indicated it is in favor of upping the national retirement age to 65, but incrementally over a number of years. This could work in the union’s favor, but it is unclear whether new union leadership will buy in. A harder sell to the union rank and file will be Chung’s order Hyundai also convert to a performance-based wage system and end the present seniority system under which a worker continues to receive cumulative wage increases based on length of service. The performance-based system is also advocated by Korea’s national government.

In many cases, older workers who have spent their careers with the company earn double the amount that younger workers with less seniority receive, but are doing the same job, often less productively.