Hyundai Motor workers vote for a strike, Kia's may follow

Unionized workers at Hyundai Motor are likely to stage a walkout for the first time in four years due to failed negotiations over pay and the abolition of the peak wage system.

Labor union at Hyundai Motor holds a meeting at the carmaker's Ulsan factory on June 28. [YONHAP]

Unionized workers at Hyundai Motor are likely to stage a walkout for the first time in four years due to failed negotiations over pay and the abolition of the peak wage system.

Of the 46,568 unionized workers at the Korean automaker, 71.8 percent agreed to a walkout, according to the union Saturday.

The vote came as Hyundai Motor’s labor union and the management initiated talks in May and held 12 rounds of negotiations through June 22 but failed to come to an agreement.

The union requested a base monthly pay raise of 165,200 won ($127) and 30 percent of last year’s operating profit as incentives. It requested an extension of the retirement age and the abolition of the peak wage system.

It also demanded the carmaker to come up with specific plans for constructing new electric vehicle (EV) facilities in Korea, not only in the United States.

The management said it cannot accept the demands due to the growing uncertainties in and outside of Korea, such as the lingering global shortage of auto semiconductors.

Once the National Labor Relations Commission decides that the union and management hold "widely different views," the union can legally stage a walkout.

If the union stages a walkout this year, it would be the first since 2018.

The union did not stage a walkout in 2019 as a trade dispute with Japan was hampering the carmaker’s sales. It was the first time for the union, with a history of militancy, to agree on a wage deal without a walkout in eight years. In 2020 and last year, Covid-19 factored into a no-walkout wage deal.

The union is expected to have a meeting on Wednesday to decide on future schedules of the workout. But it also said it is still open to talks with management regarding the terms.

In 2018, when the union went on a partial walkout for four days, it caused the company an estimated 275 billion won of loss.

Hyundai Motor's labor union voted in favor of staging a walkout on July 1. [YONHAP]

The walkout will have a serious impact on the automaker when the deliveries of orders are already an issue. As of Monday, a customer needs to wait an average of 12 months to get an Ioniq 5 EV after ordering. People have to wait 16 months to get a Santa Fe Hybrid and 18 months for a GV80.

Hyundai Motor sales decreased 4.5 percent on year in June. The sales in the country declined 13 percent, while overseas sales slid 2.5 percent.

Other carmakers in Korea are also at odds with the unions on wages.

Kia’s labor union is demanding a base monthly pay raise of 162,000 won, 30 percent of last year’s operating profit as incentives and the operation of limousine buses for commuters. It said it will join the walkout if Hyundai Motor workers decide to have one.

GM Korea workers requested a pay raise of 142,300 won and payment of 400 percent of their regular wage as incentives. They also demand the management to start manufacturing EVs at its second Bupyeong plant in Incheon, which the company is scheduled to close down this year.

Renault Korea Motors started negotiations in early May. Workers requested a pay raise of 97,472 won, abolition of the peak wage system and the recruitment of regular employees. The management refused to accept the terms.

BY SARAH CHEA [chea.sarah@joongang.co.kr]