Hyundai plant workers will vote Friday, Aug. 26, on a new tentative wage agreement reached this week.
The agreement, inked late on Wednesday with the Korea Metal Workers Union, calls for significantly less of a pay increase than the workers sought. Both Hyundai and the union say the more modest settlement comes as a result of the company’s declining financial position and its deteriorating market share in Korea.
If ratified by union membership, the new deal will constitute the least lucrative settlement in three years.
The tentative deal calls for an average monthly pay hike of 58,000 won ($52), some 62% less than the 152,050 won ($136) the union asked for and repeatedly went on strike for.
The pact also calls for a bonus of 350% of one month’s pay, an additional 3.3 million won ($3,000) in performance incentives, and the award of 10 shares of Hyundai stock to each employee and 200,000 won ($179) in gift vouchers. Hyundai’s stock was trading for 136,000 won ($122) per share on the Korean markets on Thursday, Korea time, giving the stock award value of an additional $1,220. The union initially demanded a bonus equal to 30% of Hyundai’s 2015 net profit.
The sticking point in negotiations had involved the company’s push to expand the current peak-wage system under which employee pay is reduced 10% at age 60. Negotiations will continue on that point, a Hyundai spokesman tells WardsAuto.
“As for the wage peak system, the company proposed cutting salaries for those workers aged 59 and 60 by 10% each,” he says. “The wage peak system will remain in discussion.”
The previous settlement package ratified in 2015 gave workers an 85,000 won ($76) monthly increase, a bonus equal to four months’ pay and incentive bonuses of 4.2 million won ($3,800).
The latest negotiations took place during a continuing slump in Hyundai’s reported net income, but the union staged partial strikes anyway to pressure management to yield to its demands.
Union spokesmen say Hyundai made no counter offer on wages until very recently and remains adamant about instituting a revised and expanded peak-wage system.
Hyundai claims worker average salaries nearly have doubled over the past decade, from 49 million won ($44,000) in 2004 to 97 million won ($87,000) in 2014. The average salary for 2015 was not provided.
In July Hyundai reported its 10th straight quarterly decline in profits, with second-quarter net income down 1.5% to 1.76 trillion won ($1.55 billion), despite an 8% rise in revenue.
The profit decline for the first six months of 2016 was 7%, with 3.1 trillion won ($2.73 billion) in net income reported.
While Hyundai's domestic sales have been improving, its Korean market share declined to 38.9% in 2015, a significant dip from the perennial 49% stake held at home just a few years ago.
During the negotiations, the union staged 14 partial strikes at all of Hyundai’s Korean plants, costing production losses of some 65,500 vehicles valued at 1.47 trillion won ($1.3 billion), Hyundai says.
