Partial Strikes Against Hyundai Spread to Kia

Workers walk off the job three hours before the end of their shifts at Kia’s three Korean plants as their union decides whether to call for further strikes.

The action taken Tuesday, Aug. 22, came one day after the Kia branch of the Korean Metal Workers Union announced workers would walk out in response to a KMWU call for national strikes and demonstrations to press for better working conditions, revisions to recognized worker rights and other demands.

In South Korea a political strike that interferes with production is illegal. However, union spokesmen say they were responding to KMWU’s general call in a specific attempt to make management meet their wage, bonus and working-conditions demands. That put the walkout into fairly safe legal territory.

The Kia union’s strike action committee will meet Wednesday, Aug. 23, to lay out its plan for possible additional strikes, which workers voted to authorize last month. Kia officials have no comment.

The strike action comes when Kia management is gravely concerned about the potential impact of a court ruling on a worker overtime-pay lawsuit that is set for Aug. 31.

In 2011 workers sued to force Kia to incorporate bonuses and other special allowances in hourly pay calculations. The lawsuit seeks readjustment at the higher rate of pay for all overtime payments made from 2008-2015.

Kia estimates if it loses the case and must make retroactive payments the cost will be 3.1 trillion won ($2.7 billion). Recalculating the payments to include 2016 and 2017 could boost the total liability to more than 5 trillion won ($4.4 billion).

Kia’s concern is evidenced by statements of company President Park Wan-hoo at a seminar organized by the Korean Automotive Manufacturers Assn. on the same day as the strike. The seminar included presentations from automakers, industry associations and academia to define the dire straits the industry is facing.

Overtime is common in the automotive industry, Park says at the Aug. 22 seminar. He says Kia will comply if the court rules against the automaker, but its profitability will be devastated if the company is ordered to make back payments based on the inclusion of bonuses in overtime pay.

Park notes that the impact of the payments and the union intransigence on its wage demands comes at a time when Kia is struggling in the Chinese and U.S. markets.

He says if the court rules against Kia it could disrupt the entire labor market, with all unions belonging to the KMWU filing similar lawsuits to include bonus payments in the base pay formula at the companies where they work.

At the seminar, KAMA officials note the average auto worker’s wage at all five Korean automakers reached 91 million won ($80,000) in 2016. The average pay at both Kia and its larger affiliate Hyundai is higher, averaging nearly 100 million won ($88,000), with highest-seniority employees paid much more than the average worker.

Hyundai is facing its own problems; the Hyundai branch of the KMWU, like its Kia counterpart, seeks a monthly wage increase of 154,883 won ($136) per month, plus bonuses equal to 30% of 2016 net income.

Hyundai President Yoon Gap-han, who is in charge of production and labor relations, has told union officials the time has passed for meeting the union’s wage demands. Hyundai was forced to accede to the KMWU’s demands while it was experiencing rapid annual growth, he acknowledged.

But the industry is approaching an era when overtime may not be required to meet demand, Yoon says.

Hyundai on Aug. 17 offered a monthly raise of 42,879 won ($38), far short of the KMWU’s steadfast demand for an additional 154,883 won ($136) per month.

Management also offered a bonus equal to two months’ pay and a signing bonus of 1 million won ($878).

The union rejected the offer and has staged 2-hour strikes in the middle of the day shift and the middle of the afternoon shift on Aug. 10, Aug. 14, Aug. 18 and Aug. 21. Union members also have refused to work on weekends until a contract settlement is reached.

Hyundai has not said how many units of production have been lost to the partial strikes.