Big 3 Korean Automakers, Unions Deadlocked on Wages

The unions at Hyundai, Kia and GM Korea all are affiliated with the militant Korean Metal Workers Union. All three automakers are being pressed for the same wage and similar bonus demands the KMWU central hierarchy is dictating.

Vince Courtenay, Correspondent

September 13, 2017

5 Min Read
Hyundai Genesis G70 to launch Sept 15 in Korea as labor talks stall
Hyundai Genesis G70 to launch Sept. 15 in Korea as labor talks stall.

The labor situation in South Korea’s automotive industry is a quagmire of uncertainty.

Management and worker unions at the three biggest automakers are deadlocked in wage talks, while the two smallest automakers have reached contract agreements without strike action.

The unions at Hyundai, Kia and GM Korea all are affiliated with the militant Korean Metal Workers Union. All three automakers are being pressed for the same wage and similar bonus demands the KMWU central hierarchy is dictating.

All three unions want a monthly wage hike of 154,883 won ($136) per worker. At Hyundai and Kia the unions also are demanding bonuses equal to 30% of 2016 net income, shared among workers.

The union at GM Korea is asking for the same monthly wage increase, plus a flat bonus of five months’ pay.

On Aug. 29 the negotiating team for the Hyundai Branch of the KMWU, headed by union President Park Yoo-ki, walked away from the bargaining table. Hyundai President Yoon Gap-han, who is in charge of production and labor relations, had attended that session, one of 28 held over the previous five months.

A union spokesman says the talks likely will remain suspended until November. The Hyundai union this month is holding campaigns to elect a new slate of officers, while the month of October will be spent organizing the new leadership team and setting strategies and goals before negotiations resume.

The spokesman says it is “impossible” to accept Hyundai’s offer of a 42,879 won ($38) monthly wage increase and bonuses of two months’ pay and 1 million won ($893).

Hyundai made a final-hour trial-balloon offer to up the bonus amounts to two and-one-half months’ pay and 1.5 million won ($1,340), but the union rejected it.

The bonuses, not the wages, apparently are the main sticking point for the union. The union spokesman notes Hyundai’s bonus offer was less than the company offered in 2016.

In 2016 the union had asked for roughly the same monthly wage increase (152,050 won [$135.75]), but settled for 58,000 won ($52). However, the union also won bonuses equal to three and one-half months’ pay, plus a signing bonus of 3.3 million won ($2,947).

Analysts believe temporarily shelving the wage talks puts to rest the specter of more strikes for the critical short term when a new vehicle is in launch mode. It was feared that a continuation of intermittent part-day strikes by Hyundai workers could cripple production and interfere with availability of the Genesis G70 midsize sports sedan.

A tickler photo of the Genesis G70 was released at a media event on Sept. 1 and some of its features and performance specs were revealed. Hyundai has targeted Sept. 15 for its domestic sales launch.

There still is concern the union could resume partial strikes or even full strikes in late October or early November, not only impeding the G70 program but also interfering with both domestic and export production schedules for all vehicles. Hyundai plans to launch the G70 in the U.S. early in 2017.

Court-Ordered Back Payments Hang Over Kia

At Kia, the union continues to demand the full KMWU-prescribed wage package, including bonuses equal to 30% of 2016 net income. The union membership has authorized its leadership to order strike action, but thus far only one partial-day walkout has occurred. It was held in sympathy with other unions generally protesting working conditions and was not tied specifically to the wage negotiations.

Kia Motors and its union have agreed not to discuss details of the talks with news media until a settlement is reached.

The Seoul Central District Court on Aug. 31 ordered Kia to award union workers 422.3 billion won ($375 million) in back pay for overtime-payment shortfalls in the 2008-2011 period. If upheld by the Supreme Court, where Kia has filed an appeal of the lower court’s ruling, every worker who was employed in the period could receive a 15 million won ($13,300) payout.

That special one-off payment would be in addition to whatever gains the union may make in the current wage negotiations.

Kia also may have to adjust overtime payments for the subsequent period not covered by the ruling and anticipates total liability of 1 trillion won ($887 million).

At GM Korea, the country’s third-largest automaker by sales volume, the union is demanding the KMWU-prescribed 154,883 won ($138) monthly wage increase and five months’ pay as a bonus.

The automaker has countered with a 50,000 won ($44.65) monthly wage increase, a one-time special signing bonus of 6 million won ($5,360) and a 4.5 million won ($4,020) performance bonus to be paid at year’s end if productivity and production goals are met.

The union’s apparent sticking point is with both the monthly wage increase and bonus offers. The 10.5 million won ($9,380) GM Korea is offering in the total bonus package amounts to less than two months’ average pay, while the union is demanding five months’ pay.

“GM Korea is committed to reaching a fair and reasonable wage agreement, as it continues to address its sustainability and profitability,” a company spokesman tells WardsAuto.

Workers at Ssangyong, Korea’s fifth-largest automaker, on July 30 ratified a new contract that contains a larger monthly pay increase than the package Hyundai has offered to its union, although the bonus payout is less.

The deal gives workers a 53,000 won ($47) monthly pay hike, two-and-one-half months’ pay as a performance bonus and 150 shares of common stock.

The settlement marked the eighth year in a row the union and Ssangyong have settled wage negotiations with no strike action.

Renault Samsung seemingly also was in the clear, having reached a tentative agreement with its union Aug. 29. It would have marked the third year in a row an agreement was reached without strike action.

However, within hours the union rank-and-file at the main plant in Pyongtaek and the engine plant in Changwon rejected the deal by a slight margin. Sources at RSM say workers were unhappy because they had learned of the bonus back pay situation at Kia and wanted to include bonuses as part of their basic wage.

Management had offered a 62,400 won ($59) monthly wage boost, a 4 million won ($3,600) performance bonus and a 1.5 million won ($1,340) bonus to be paid for signing a contract without a strike.

Additionally, RSM workers would receive one and-a-half months’ pay in production-based bonuses and an additional half-month’s pay as a bonus for achieving company goals.

Talks are ongoing. The union has approved strike action, but no walkouts have been held.

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