Korean shipbuilders, automakers face wage standoff with union

HD Hyundai Heavy Industry Co.’s shipyard in Ulsan. [Courtesy of HHI]

The management of South Korean shipbuilders and automakers are facing conflict with their labor unions in terms of wage, raising concerns that a potential strike may hit a blow on their strong businesses.

According to industry sources on Sunday, the labor unions of major companies including HD Hyundai Heavy Industries Co., Hyundai Motor Co., and Kia Corp. have announced planned strikes for this fall.

The union of HD Hyundai Heavy Industries said Friday that it will initiate an indefinite, full-scale strike starting Wednesday. Although the shipbuilder’s labor-management negotiations reached a tentative agreement in late August, it was rejected by union members at a general meeting two days later.

The proposed agreement included a basic wage increase of 120,000 won ($90.8), a bonus payment of 3.5 million won, and a 2 billion won budget for operating recreational facilities.

The company’s union believes that the proposed wage increase and bonus amount fall short of its expectations. The union pressed for additional increases during subsequent negotiations, but the management expressed reluctance, citing an inability to hastily present additional proposals.

Amid the ongoing disagreement, the union conducted its first three-hour partial strike for this year’s wage increase and plans to carry out additional two-hour partial strikes on Monday and Tuesday.

The union’s announcement of an eight-hour full-scale strike is seen as an attempt to exert pressure on management amid the thriving industry.

HD Hyundai Heavy Industries swung to a profit for the first time in the second quarter since the orders they have received since the pandemic began to be realized.

The shipbuilder’s union stated that negotiations are ongoing and acknowledged concerns about securing funds.

Hyundai Motor Co., and Kia Corp. headquarters in Seoul. [Photo by Lee Chung-woo]

The union of Hyundai Motor, a member of the Korea Confederation of Trade Unions, the nation’s largest labor organization, has recently taken steps toward a strike following a vote among all union members, with about 92 percent supporting a strike.

The Hyundai Motor union is demanding a basic wage increase of 184,900 won, a performance bonus of 30 percent of last year’s net profit, including stocks, a 900 percent special bonus, and various other allowances.

The union has also proposed raising the retirement age to 64 years old from the current 60, in line with the age for national pension benefits.

The automaker’s union has announced that it will refuse overtime work starting from the second week of September and may initiate a strike if the management shows no change in its stance.

Given the automaker’s production capacity of around 2,500 vehicles per day, there may be an immediate disruption in production, affecting about 10,000 vehicles per month. The company’s management plans to continue negotiations with the union before responding to their demands.

Its smaller sibling Kia also announced a breakdown in negotiations for this year’s collective bargaining after the ninth round of negotiations on August 31.

The Kia union’s demands are similar to those of the Hyundai Motor union, including a basic wage increase of 184,900 won, a performance bonus of 30 percent of last year’s operating profit, an extension of the retirement age to the previous year of receiving national pension benefits, and new hires.

The union plans to conduct a vote among all union members on Friday to determine whether or not to strike.