Hyundai Workers Ratify Labor Pact

Hyundai workers represented by the Korea Metalworkers Union ratify the new labor pact reached with management last week.

Fifty-three percent of the union members who voted Monday approved the agreement, not a wide margin but enough to put the 44,000 Hyundai workers back on the job and end their intermittent strike action.

The pay package includes a 98,000 won ($86.50) per month pay increase and two of the biggest bonuses ever won by a union in Korea.

The incentive bonus calls for payment of 350% of basic monthly salary plus 9 million won ($7,952), and the signing bonus calls for 150% of monthly salary plus 600,000 won ($530).

Workers receive different rates of monthly pay depending on job classification and years of seniority.

The union on its website says the average bonus payout for Hyundai workers will be 27.3 million won ($24,120), in addition to the wage increase.

Hyundai also agrees to invest some 300 billion won ($265 million) in new line equipment to increase productivity to help workers produce more vehicles with fewer hours per shift.

While many reports state the partial strikes that took place in July and August were responsible for Hyundai’s sharp August sales decline, a spokesman tells WardsAuto other factors were involved.

“It had an impact, but it was not the sole reason,” the spokesman says. “A decline in demand and summer vacation also affected production.

“Hyundai Motor management is pleased that the labor union members approved the agreements made last week, putting an end to the strikes. Our priority now is to normalize production and fulfill customers’expectations.”

Hyundai reported domestic production of 53,333 vehicles for August, off 41.6% from July and 31% from year-ago.

For the 8-month period domestic production was up 9% to 80,220 vehicles.

Total global sales for the first eight months rose 8.6% to 2,804,960 units, including domestic deliveries totaling 424,018, a decline of 6.9%.

As part of the new pact, Hyundai management agreed to end the two 10-hour shifts that required many workers to stay on the job overnight. A new 8-hour and 9-hour shift will begin in March 2013, with no work performed after 1 a.m.

The spokesman confirms the 12 partial-day strikes since July 13 cost the auto maker 76,723 units of production valued at some 1.59 trillion won ($1.4 billion).

Hyundai management now has the thorny job of negotiating with the temporary employees union. The union, which represents some 13,000 contract workers or employees of in-plant suppliers, is demanding its members be converted to fulltime employee status after two years on the job.

Hyundai has offered to convert 1,000 of the part-time employees to regular worker status this year and another 2,000 in stages through 2015. The temporary workers union rejected that offer.

Analysts say it is highly unlikely Hyundai’s regular workers would support strike action by the temporary workers. However, they also say it is easy and possible for the temporary workers to shut down production operations of a plant by laying down their tools and staging prolonged plant sit-ins.