Second Korean Automaker Offers Wage Concession

The pressure increases on Hyundai, Kia and Renault Samsung as management at a second Korean automaker offers to include bonus payments in its regular wage package, in line with demands from the Korea Metal Workers Union.

Ssangyong, a subsidiary of Indian automaker Mahindra & Mahindra, proposed during negotiations Tuesday to prorate regularly paid annual bonuses so as to include the amounts in employees’ regular wages.

Doing so would substantially hike payments made for overtime, holiday work, severance packages at retirement and in other ways. However, Ssangyong is on the threshold of a turnaround and a strike would destroy the momentum, analysts say.

For the first half of 2014 Sangyong’s domestic deliveries were up 13.5% to 33,235 units. Export sales were up 8% to 40,706.

In addition to recalculating the basic wage, sources say, Ssangyong also has offered to give workers an 800% bonus – eight months’ pay – for signing the proposed deal.

Last week GM Korea CEO Sergio Rocha made a breakthrough offer when he told union bargainers the company was willing to renegotiate the basic wage package to include regular bonuses.

Heretofore under industry practices, amounts paid over time as regularly scheduled bonuses were excluded from the basic wage calculation. Unionists say this merely was a tactic by automakers to minimize labor costs and the bonuses actually were part of the pay package negotiated in collective-bargaining sessions.

Sources say that while lead negotiators of the KMWU’s GM Korea Branch immediately reacted positively to the automaker’s offer, they later told management they wanted the recalculation to be retroactive to Jan. 1 of this year, requiring readjustment of the wage agreement that is now expiring.

If management agrees to that demand, then GM Korea would be obligated to calculate the amounts employees were underpaid in the first six or seven months of 2014 and make retroactive payments.

The KMWU has urged unions at all automakers to press not only for the basic wage recalculation, but also to demand that wages going back a full three years also are readjusted so underpayments can be made to all workers. Under Korean law, there is a 3-year statute of limitations on worker pay disputes.

Hyundai, facing worker lawsuits making such demands, has stated it will not readjust the basic wage unless it loses in the courts and is ordered to do so. The cases may take years to be resolved.

Kia is in much the same shape as Hyundai, but is managing to keep a low profile throughout the current period of wage talks.

Renault Samsung, however, already has experienced a partial strike and the union has scheduled more 2-hour strikes to press for wage increases, bonuses and recalculation of the basic wage.

For the past two years the RSM workers’ branch of the KMWU agreed to a wage freeze because the automaker was in decline, suffering from low sales. However, they now are avidly seeking an increase in the double-digit range to make up for it.

Management is offering wage increases in steps over time, which the union is rejecting.