South Korean Automotive Manufacturers Struggling Again This Year Due to Disputes between Management and Labor Union

Jun 17, 2019

Sense of crisis for ‘summer labor dispute’ within South Korea’s automotive industry, which is losing its competitiveness in production every year, is becoming more heightened day by day. Although Renault Samsung Motors’ labor and management finally signed a collective bargaining last year after many difficulties, they need to start from the beginning for this year’s negotiation. Labor unions of Hyundai Motor Company, Kia Motors, and GM Korea are considering going on strikes again this year. Excluding Ssangyong Motor that signed negotiations for 9 years in a row until last year without any dispute, other four automotive manufacturers are expecting to have rough collective bargaining on wage again this year.
◊Hyundai and Kia expecting rough times due to one-sided request on extension of retirement age
Hyundai Motor Company’s labor and management started a negotiation for this year’s collective bargaining on wage on the 30th of last month. Its labor union is requesting a wage increase of $104 (123,526 KRW), which is 5.8% of basic wage, and 30% of net profit as bonus.
Labor union is expected to request extension of retirement age especially. Basically, it is requesting to extend retirement age to 64 from 60.
Reason why Hyundai Motor Company’s labor union is putting out extension of retirement age first out of four major tasks (retirement, ordinary wage, stable employment, part-time job) for this year’s collective bargaining is because there has been a rapid increase in number of retirees. 17,500 employees, which correspond to 30% of members of Hyundai Motor Company’s labor union, will retire by 2025. In addition, it is requesting Hyundai to hire full-time employees every time there is a retiree. Kia Motors’ labor union is also planning to focus on extension of retirement age first.
Fact that there is a growing insecurity towards work due to expansion of future vehicle business is the reason why labor unions are requesting for extension of retirement age. Global automotive manufacturers already started reducing number of their employees or are planning to start on it. If internal-combustion engine-based cars are replaced by future vehicles, this will lead to reduction of parts and simplification of production process and ultimately less work.
Application of ordinary wage to bonus is one of major issues for this year’s collective bargaining. Hyundai Motor Company’s management won first and second trial on ordinary wage lawsuit. This is because detailed terms are different from that of Kia Motors where Kia Motors’ labor union won first and second trial. Hyundai Motor Company’s labor union is asking its management to pay ordinary wage at an equal level as Kia Motors.
It is expected that management will have difficult time accepting extension of retirement age when it is concerned about actual existence of factories in South Korea. Hyundai Motor Group is not carrying out salary peak system. Amount of financial burden will grow for management if it extends retirement age when its sales to personnel expense ratio is the highest out of all global automotive manufacturers.
Change to Hyundai Motor Company’s labor union’s executive branch is another variable. It is facing an election for its new chairman in this coming September. If it is not able to sign a collective bargaining on wage in the near future, new executive branch needs to have another negotiation from the beginning.

South Korean Automotive Manufacturers Struggling Again This Year Due to Disputes between Management and Labor Union

◊GM Korea struggling to even find a place for negotiation
GM Korea is in its worst situation as it has yet to decide on a place for wage negotiation this year. Its labor union stated that its management is delaying negotiation on purpose and is getting ready to go on a strike. It is going to cast votes from its members for strike.
It submitted a labor dispute mediation application to National Labor Relations Commission by stating that its management is not participating in a collective bargaining on wage while requesting a change to a place for negotiation. It explained that it is planning to go on a strike as collective bargaining on wage, which was set to start on the 30th of last month, was foundered six times due to absence of its management.
It stated that its management is delaying negotiation on purpose while requesting a change to a place for negotiation due to safety issue. Management made a request to its labor union about having a negotiation at a conference room within main building.
National Labor Relations Commission can suspend mediation or decide on administrative guidance if mediation between GM Korea’s labor and management does not fall through. If there is a decision for suspension on mediation or more than 50% of members of GM Korea’s labor union vote for a strike, labor union will secure a right to go on a strike legally.
This is the second time this year when GM Korea’s labor union is pushing to secure a right to strike. In April of this year, GM Korea’s GM Technical Center Korea’s labor union had a conflict its management regarding a revision to collective bargaining and secured a right to strike after going through votes by its members and applying for dispute mediation. However, this did not lead to an intense strike.
GM Korea’s labor union is planning to request a heavy wage increase from its management as it conceded more to its management last year. It is going to request $104 (123,526 KRW) increase to base pay, 250% bonus of ordinary wage, and morale booster bonus of $5,500 (6.5 million KRW). It is also planning to suggest special requests such as promise on prediction of development of plants and procurement of outputs.
“Production will only become slower as strikes and exportation and domestic demand issues all happen at the same time within automotive industry.” said a representative for the automotive industry.
Staff Reporter Jung, Chiyeon | chiyeon@etnews.com

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