Hyundai Motor’s management, union reach tentative wage deal for this year

Hyundai Motor’s labor and management are holding a meeting on June 13. [Courtesy of Hyundai Motor]

The management and labor union of South Korea’s Hyundai Motor Co., on Tuesday reached a tentative agreement on this year’s wage and collective bargaining terms, raising expectations that the country’s top automaker will be able to go without a strike for a fifth straight year for the first time since labor inception in 1987.

Under the provisional agreement, the two parties agreed on an 111,000 won ($83.8) hike in this year’s basic salary, 300 percent bonus for 2022 performance plus 8 million won, special incentive of 2.5 million won to celebrate the selection of the World Car of the Year, an encouragement bonus of 100 percent for achieving business goals in the second half of 2023, 15 shares, and 250,000 won in traditional market gift certificates.

The two sides agreed to the settlement based on Hyundai Motor’s strong performance despite industry challenges triggered by the global supply chain disruption and geopolitical risk.

Hyundai Motor posted 4.2 trillion won in consolidated operating profit in the second quarter on sales of 42.2 trillion won in its preliminary results. It is the first time for its operating profit to exceed 4 trillion won.

Hyundai Motor achieved record earnings for three straight months.

During this year‘s negotiations, the management and labor union also signed a special agreement for shared growth, which involves transforming local factories into core manufacturing bases for the company’s mid- to long-term future businesses.

To achieve this, the two sides will expand the application of aluminum bodies for finished vehicles in order to shift to electrification and reduce body weight.

For this purpose, they will internalize hyper casting technology, an advanced large-scale die-casting body manufacturing process, and build a new factory to apply hyper casting and apply it to mass production from 2026 if it becomes competitive.

They will also construct a multifunctional and multipurpose production plant to develop and produce small quantities of certain vehicle types, such as high-end models and limited editions, which cannot be produced on existing production lines.

The labor and management will also establish selection and placement criteria for employees who will work at the new electric vehicle (EV) plant, which is scheduled to begin mass production in 2025, and develop and operate special training programs.

The two sides also worked out a special agreement to address the chronic low birthrate.

Measures include extending paid maternity leave from 3 to 5 days, unlimited support for infertility treatment up to a limit of 1 million won per procedure, and increasing childbirth congratulatory payments for the first, second, and subsequent children, among others.

To address youth unemployment, the management and labor plans to hire an additional 800 technical workers, including 500 in 2024 and 300 in 2025. This follows last year’s bargaining agreement to hire 400 workers this year and 300 in 2024.

The timing and method of hiring will be determined based on factors such as workforce management, technological changes, and other conditions.

As for the extension in retirement age, the most contentious issue, the two sides agreed to carry out discussions by the first half of next year when the relevant law is revised.

Although the management and labor reached a tentative deal without a strike, a majority of members should vote in favor of the deal in an all-member vote scheduled for September 18 to fully finalize the deal.

If it is rejected, it is likely that the union will launch a strike.

If this year ends without a strike, it will be the first time for the company to achieve peaceful negotiations without a strike for a fifth straight year since the union was founded in 1987.