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Partial strike adds to Hyundai Motor’s headaches

PUBLISHED : August 10, 2017 - 18:02

UPDATED : August 10, 2017 - 18:07

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[THE INVESTOR] A decision by unionized workers on Aug. 10 at  Hyundai Motor to stage a series of partial strikes is likely to further burden the South Korean automaker, which is suffering from sluggish overseas sales partly due to a diplomatic dispute between Seoul and Beijing.

Calling for wage hikes and job security, union members of Hyundai Motor said they would stage partial strikes on Aug. 10 and 14 for two hours at 11:30 a.m., and at 8:20 p.m. The automaker’s unionized workers have staged sit-in protests for six consecutive years in order to increase their leverage ahead of an annual wage agreement.




They are demanding the nation’s largest carmaker add 154,883 won (US$136) to their monthly salaries and spare 30 percent of the company’s 2016 net profit for their bonuses. The workers are also urging the company to keep their jobs secure after they reach the retirement age of 60 until they become recipients of the national pension, which starts at the age of 65.

The move came amid worsening performance at the carmaker. In the second quarter, Hyundai saw 913.6 billion in net profit, the lowest since it adopted International Financial Reporting Standards in 2010.

The carmaker has been suffering from an unprecedented sales slowdown, which it believes to be due to growing anti-Korean sentiment in China amid a diplomatic row over the deployment of a US anti-missile in South Korea. China has been Hyundai’s largest market, but monthly sales have been declining since March.

Seeking a breakthrough, the carmaker decided to put more effort into Europe, introducing its new compact sport utility vehicle Kona this month. But the unionized workers’ partial strike could disrupt the plan as the carmaker’s Ulsan plant is the sole manufacturing site for the Kona.

While the labor strikes at Hyundai have burdened the carmaker for years, the company is additionally facing potential hurdles regarding an impending court ruling on Kia’s “ordinary wages.”

About 27,000 workers at  Kia Motors, Hyundai’s sister company, had asked for the court’s judgement to include their bonuses as part of their ordinary wages. Ordinary wages are used as the basis for calculating various types of compensation and severance pay. If the court rules in favor of the workers, Kia Motors is likely to be made to pay 3 trillion won to the workers in unpaid benefits. The ruling, set to be made this month, has been at the center of controversy in the industry, as it would impose a heavy burden on carmakers here.

Automakers operating in Korea said in a joint statement on Aug.10 that they would be forced to consider relocating their manufacturing plants overseas if the court sides with the employees, saying it would deal a severe blow to their management. 

By Cho Chung-un/The Korea Herald (christory@heraldcorp.com)

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