Hyundai union votes to strike as wage negotiations stall

The union of Hyundai Motor Group voted overwhelmingly to strike as wage negotiations with the automaker stall, primarily over a retirement age extension that could cost the company billions.

Members of the union and representatives of Hyundai Motor Group meet for discussions at the company's Ulsan plant on June 18. [HYUNDAI MOTOR GROUP]

Hyundai Motor Group, already struggling with tariffs on imported cars in the United States, now faces a possible strike by its labor union, which is demanding extended retirement age and higher performance bonuses.

Industry observers warn that if production is disrupted, the group could suffer a dual blow from both lost sales and tariff burdens.

The Hyundai Motor union, part of the Korean Metal Workers’ Union under the Korean Confederation of Trade Unions, said Monday that 86.15 percent of its 39,966 members voted in favor of a strike in a ballot on this year’s wage negotiations.

The National Labor Relations Commission determined immediately after that the labor-management gap is too wide and decided to end mediation, legally allowing the union to strike. Should the walkout proceed, it would mark the end of the union's seven-year streak without a strike since July 2018.

The union has demanded a 141,300 won ($101) increase in base pay, collective performance bonuses worth 30 percent of the previous year’s net profit, a retirement age extension from 60 to 64, the introduction of a four-and-a-half-day workweek that would reduce weekly working hours from 40 to 36 and an increase in annual bonuses from 750 to 900 percent of the base salary.

Seventeen rounds of talks have been held since June 18, but the union broke off negotiations on Aug. 13 after the company failed to present a concrete offer.

Union officials shout slogans during a press conference at the union's branch office in Hyundai Motor Group's Ulsan plant on Aug. 18. [NEWS1]

“The company's failure to present a proposal could lead to an actual strike,” said a union representative.

Hyundai Motor Group expressed regret, saying in a statement, “It is unfortunate that the union declared a breakdown in negotiations at a time when the business environment is difficult due to tariffs in the United States and other external pressures,” adding, “Although talks have stalled, both sides have agreed to continue working-level consultations, and we will strive to reach an agreement during the mediation period.”

Industry insiders see the retirement extension demand as the biggest sticking point. While wage and bonus requests are similar to past years, Hyundai already introduced a system in 2023 allowing employees to work under contract until the age of 63.

Despite this, the union is now seeking to raise the official retirement age to 64, in line with the scheduled increase in the national pension eligibility age — currently 63 and rising to 64 in 2028 and 65 in 2032.

Union members protest during the launch of a rally for this year's collective bargaining with the company at Hyundai Motor Group's Ulsan plant on June 26. [YONHAP]

The issue is labor costs. With the average annual salary of Hyundai employees standing at 124 million won last year, extending the retirement age by four years would cost an additional 496 million won per worker.

Assuming roughly 2,500 retirees each year continue working for four more years, the company would face an annual cost increase of 1.24 trillion won, equivalent to 9 percent of its 2024 net profit.

The costs are exacerbated by the use of a seniority-based pay system without a peak wage policy, meaning pay continues to rise with tenure, adding to the financial burden.

“Even if retirement is extended, there may not be many positions for these employees as domestic production lines transition to electric vehicles and overseas production expands,” said Lee Hang-gu, an adviser at the Korea Automotive Technology Institute. “The company may prefer hiring new workers instead.”

Union head Moon Yong-moon speaks during a press conference at the union office inside Hyundai Motor Group's Ulsan plant on Aug. 18. [NEWS1]

The potential financial impact of a strike is significant. A 24-day strike in 2017 disrupted the production of about 89,000 vehicles, causing losses estimated at 1.89 trillion won, or about 80 billion won per day.

Hyundai’s operating profit for the first half of this year came to 13 trillion won, down 12.7 percent from the same period last year, largely due to tariffs. Although Korea and the United States reached an agreement on the rate in late July, Hyundai and Kia have been subject to a 25 percent tariff since April. The rate is expected to fall to 15 percent in the fourth quarter, but the final decision rests with Washington, leaving uncertainty.

“Hyundai’s record-high net profit last year was not only due to the contribution of production workers but also to diversification efforts such as expanding into new markets,” said Cho Chuel, a senior research fellow at the Korea Institute for Industrial Economics and Trade. “For the company’s future, the union should recognize that sustainable competitiveness is more important than short-term wage increases.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom. BY KIM HYO-SEONG, LEE SU-JEONG [lim.jeongwon@joongang.co.kr]