Hyundai Workers OK Wage Pact; Tentative Deal at Kia

Unionized workers at Hyundai ratify a new wage agreement after months of negotiations punctuated by strikes that cost the automaker thousands of units of lost production in Korea.

Also Monday, bargainers with the Kia branch of the Korea Metal Workers Union reach tentative agreement with the Hyundai affiliate on a contract including a pay raise and bonus plan identical to the Hyundai agreement.

The new wage package calls for an average monthly pay increase of 58,000 won ($54), a bonus equivalent to three months’ pay, and a cash and gift certificate bonus totaling 3.2 million won ($3,000).

The wage agreement is retroactive to cover the full 12 months of 2017, which means Hyundai workers also will receive the 2017 raise in a lump sum of 696,000 won ($653).

KMWU members approved the tentative agreement by a 61% majority in voting that began Sunday.

Neither Hyundai nor the Hyundai Motor Group immediately issued any official statement regarding the new agreement or disclosing plans for making up lost production and simultaneously launching production of new models.

KMWU strikes during 2017 reportedly caused Hyundai to suffer production losses of some 77,000 vehicles valued at 1.62 trillion won ($1.5 billion) in revenue.

A Hyundai Motor Group spokesman declines to discuss production losses incurred in either 2017 or 2018, or other details of the impact of the many partial strikes held at both Hyundai and Kia.

However, the spokesman tells WardsAuto the vital new Kona subcompact CUV which analysts expect to sell in the 150,000-unit range this year has not been affected.

“Kona is in full production currently and there’s no change in its U.S. launching for early 2018,” the spokesman says.

Labor relations at Hyundai have been hectic since negotiations began in April. Kia has experienced virtually the same situation in lockstep with Hyundai, including frequent production-crippling partial strikes.

A strike vote was held at Hyundai July 14 following weeks of lackluster meetings. Although 66% of Hyundai’s unionized work force voted in favor of partial strikes, the union’s president issued a statement July 19 saying the KMWU would continue negotiating in good faith without strike action. He said he hoped a new agreement would be reached before the traditional summer holiday began Aug. 31.

That didn’t happen and the Hyundai union announced its first strike action Aug. 8, saying it would stop production lines for two hours per shift on Aug. 10 and 12. However, the KMWU called for specific shutdown hours in the middle of both the morning and afternoon shifts, which caused greater disruption to production scheduling.

The limited 2-hour partial strikes then continued, with union officials decrying management for not acceding to its demand for a 154,883 won ($145) average monthly pay increase and bonuses amounting to 30% of the automaker’s 2016 net income, which would calculate to roughly $30,000 per employee.
Hyundai management responded Aug. 17 with its first new wage offer, which fell far short of the union’s demands. The package included a monthly raise of 42,879 won ($40), bonuses of two months’ pay and 1 million won ($939).

Union bargainers instantly rejected it, and Hyundai management quickly made a second proposal offering the same monthly wage hike, but offering to boost the bonuses considerably to the equivalent of 2.5 months’ pay and 1.5 million ($1,400). The second offer also was rejected by union negotiators and the partial strikes were ratcheted upward to four hours per shift (8 hours daily).

On Aug. 30 the KMWU announced it was breaking off the negotiations so Hyundai’s Korean plants could hold local votes for new union leadership. The local union elections began in September and negotiations did not resume until October.

The back-and-forth standoff continued in deadlock until both sides tentatively agreed on a new offer from management Dec. 19. It included a wage increase of 58,000 won ($54 monthly) and bonuses of three months’ pay and 3 million won ($2,800).

Union members narrowly defeated the tentative agreement in a ratification vote at the end of the same week, pushing the negotiations into 2018. It was the first time in Hyundai history that a new wage agreement had not been reached during the current contract year.

Following the New Year's holiday the Hyundai union struck for four hours per shift beginning Jan. 4. They upped the pressure to six hours per shift Jan. 10, the same day a new tentative offer was agreed to. The afternoon shift struck for six hours even though the tentative agreement had been reached earlier in the day.

Hyundai kept the monthly wage package virtually the same, increasing the cash bonus payout from 3 million won to 3.2 million won ($2,800 to $3,000). The union thus went on strike for 10 days in 2018 to gain only an additional one-time payout of 200,000 won (a little less than $200).

A Hyundai Motor Group spokesman says the 3.2 million won bonus contains an increment of gift certificates so it is not clear how much of it is an actual cash offer.

Kia’s negotiations also spilled into 2018. Following Hyundai’s example the KMWU’s Kia branch started a series of partial strikes on Jan. 5. A tentative agreement was reached Sunday, with a ratification vote to take place before the end of the week.