Hyundai, Kia Workers Set to Stage Partial Strikes

The Hyundai branch of the Korean Metal Workers Union will hold partial strikes this week after the automaker made a wage offer equal to roughly half of what the union had sought.

Unionized workers will strike at all six of Hyundai’s vehicle plants in Korea for four hours Wednesday, followed by 6-hour walkouts both Thursday and Friday. It would be the union’s fourth strike against Hyundai in as many years.

Talks broke down ahead of the customary deadline for reaching a contract agreement before the country’s Chuseok Thanksgiving holiday.

Hyundai has given no indication it will accede to the union’s demands, which include substantial bonuses and restricting of the retirement-age policy in addition to a wage hike.

“There is nothing to be gained from a strike that ignores reality," Yoon Gap Han, Hyundai president for plants and production, says in a statement. A strike could hurt the brand in Korea and lead to “customer defections,” he adds.

Union president Lee Kyung-hoon says, meanwhile, that the automaker’s last offer made Sept. 15 was “unreasonable and provided without careful thought.”

A walkout would disrupt production not only at Hyundai but also at the automaker’s Kia affiliate. Of Kia’s more than 31,000 union members, nearly 73% cast ballots and a majority voted Sept. 16 to strike.

According to the union website Hyundai management offered to raise workers’ average monthly pay by 79,000 won ($67), plus bonuses of 2 million won ($1,700) and three months’ average salary, as well as a rollback in assembly-line working hours.

The union seeks double what the company has offered: a 159,900 won ($136), or a 7.8%, average increase in monthly pay, bonuses equivalent to 30% of Hyundai’s 2014 net profit and an extension of the worker retirement age from 58 to 65.

The union also rejected Hyundai’s plan to introduce a peak wage system. The automaker presented the plan at the bargaining table three weeks ago and the union threatened to break off negotiations if the issue was raised again.

The Korean Confederation of Trade Unions, Korea’s second-largest trade union umbrella group, to which Hyundai’s KMWU belongs, is a staunch opponent of the peak wage system. It has strongly denounced it, holding public demonstrations and urging national strike action.

Peak Wage Proposal on Table Elsewhere

On the other hand, Korea’s largest labor union group, the less militant Federation of Korean Trade Unions, last week agreed to hold tripartite talks with the government and industry groups with a view to implementing peak-wage systems.

The government is encouraging all manufacturers to introduce a merit-based peak-wage system under which a worker’s salary would be decreased in steps starting at an age set by each company, until the worker retires.

This would reduce the company’s labor costs and make more money available for hiring younger workers, the government and industry associations contend. Hyundai workers now are employed under a seniority-based system in which wage increases are based on years on the job.

The government and industry associations contend workers’ productivity goes down as they age and it is a waste of company resources to increase their wages after they reach a certain age.

Before presenting it to the union, Hyundai Motor Group, which includes Hyundai, Kia and more than 40 other Hyundai affiliates, issued a news release in which it said the peak-wage system would be implemented in 2016.

“We will push to increase young workers’ employment by hiring 1,000 more annually,” the release read. “The decision to implement the peak-wage system and expand young adults’ employment was made to fulfill our social responsibility of improving job security and to obtain talented workers.”

Kia this year did not begin negotiations until after the annual plant shutdown in August. Both sides agreed to make no public comments, but after eight unproductive bargaining sessions the union called for the strike vote workers overwhelmingly approved.

Kia workers seek a 7.7% monthly wage increase of 159,000 won ($135), only $1 less than that demanded by their Hyundai counterparts. The Kia union demands a raise and bonus arrangements similar to those demanded by Hyundai’s union.

Several Korean and English-language newspapers have published editorials denouncing the union for excessive wage demands at a time when Hyundai is losing global sales.

“Each Hyundai worker receives an average of 97 million won ($82,000) yearly, more than the earnings of its rivals like Toyota and Volkswagen. In contrast, the per-capita sales of Hyundai fall short of half of Toyota’s,” the English-language Korea Herald wrote.

 “The union’s demand to change the retirement age to 65 tells us how greedy it can be. The nation’s legal retirement age is being extended to 60 next year, a belated step to cope with the fast aging of the population.”

Hyundai reports global sales from January through August fell 2.8% to 3.1 million, while domestic sales for the period were down 1.6% and exports were off by 3.1%.

The Hyundai branch of the Korean Metal Workers Union will hold partial strikes this week after the automaker made a wage offer equal to roughly half of what the union had sought.

Unionized workers will strike at all six of Hyundai’s vehicle plants in Korea for four hours Wednesday, followed by 6-hour walkouts both Thursday and Friday. It would be the union’s fourth strike against Hyundai in as many years.

Talks broke down ahead of the customary deadline for reaching a contract agreement before the country’s Chuseok Thanksgiving holiday.

Hyundai has given no indication it will accede to the union’s demands, which include substantial bonuses and restricting of the retirement-age policy in addition to a wage hike.

“There is nothing to be gained from a strike that ignores reality," Yoon Gap Han, Hyundai president for plants and production, says in a statement. A strike could hurt the brand in Korea and lead to “customer defections,” he adds.

Union president Lee Kyung-hoon says, meanwhile, that the automaker’s last offer made Sept. 15 was “unreasonable and provided without careful thought.”

A walkout would disrupt production not only at Hyundai but also at the automaker’s Kia affiliate. Of Kia’s more than 31,000 union members, nearly 73% cast ballots and a majority voted Sept. 16 to strike.

According to the union website Hyundai management offered to raise workers’ average monthly pay by 79,000 won ($67), plus bonuses of 2 million won ($1,700) and three months’ average salary, as well as a rollback in assembly-line working hours.

The union seeks double what the company has offered: a 159,900 won ($136), or a 7.8%, average increase in monthly pay, bonuses equivalent to 30% of Hyundai’s 2014 net profit and an extension of the worker retirement age from 58 to 65.

The union also rejected Hyundai’s plan to introduce a peak wage system. The automaker presented the plan at the bargaining table three weeks ago and the union threatened to break off negotiations if the issue was raised again.

The Korean Confederation of Trade Unions, Korea’s second-largest trade union umbrella group, to which Hyundai’s KMWU belongs, is a staunch opponent of the peak wage system. It has strongly denounced it, holding public demonstrations and urging national strike action.

Peak-Wage Proposal on Table Elsewhere

On the other hand, Korea’s largest labor union group, the less militant Federation of Korean Trade Unions, last week agreed to hold tripartite talks with the government and industry groups with a view to implementing peak-wage systems.

The government is encouraging all manufacturers to introduce a merit-based peak-wage system under which a worker’s salary would be decreased in steps starting at an age set by each company, until the worker retires.

This would reduce the company’s labor costs and make more money available for hiring younger workers, the government and industry associations contend. Hyundai workers now are employed under a seniority-based system in which wage increases are based on years on the job.

The government and industry associations contend workers’ productivity goes down as they age and it is a waste of company resources to increase their wages after they reach a certain age.

Before presenting it to the union, Hyundai Motor Group, which includes Hyundai, Kia and more than 40 other Hyundai affiliates, issued a news release in which it said the peak-wage system would be implemented in 2016.

“We will push to increase young workers’ employment by hiring 1,000 more annually,” the release read. “The decision to implement the peak-wage system and expand young adults’ employment was made to fulfill our social responsibility of improving job security and to obtain talented workers.”

Kia this year did not begin negotiations until after the annual plant shutdown in August. Both sides agreed to make no public comments, but after eight unproductive bargaining sessions the union called for the strike vote workers overwhelmingly approved.

Kia workers seek a 7.7% monthly wage increase of 159,000 won ($135), only $1 less than that demanded by their Hyundai counterparts. The Kia union demands a raise and bonus arrangements similar to those demanded by Hyundai’s union.

Several Korean and English-language newspapers have published editorials denouncing the union for excessive wage demands at a time when Hyundai is losing global sales.

“Each Hyundai worker receives an average of 97 million won ($82,000) yearly, more than the earnings of its rivals like Toyota and Volkswagen. In contrast, the per-capita sales of Hyundai fall short of half of Toyota’s,” the English-language Korea Herald wrote.

 “The union’s demand to change the retirement age to 65 tells us how greedy it can be. The nation’s legal retirement age is being extended to 60 next year, a belated step to cope with the fast aging of the population.”

Hyundai reports global sales from January through August fell 2.8% to 3.1 million, while domestic sales for the period were down 1.6% and exports were off by 3.1%.