The unionized workers of Hyundai Motor in South Korea are undergoing a crucial vote to decide on whether to proceed with a strike. The decision comes after two months of negotiations with the company regarding wage increases and extending the retirement age hit an impasse last week.
Potential for First Strike in Five Years
If the union decides to stage a strike, it would mark the first such action in five years related to wage discussions at the South Korean automaker. The strike could also disrupt the production and delivery of some popular vehicles, which Hyundai has been struggling to accelerate due to extended component shortages.
Union Demands and Voting Outcome
The prominent union, boasting around 40,000 members, is advocating for a minimum basic monthly pay hike of 184,900 South Korean won (approximately $139) and a performance-based pay equivalent to 30% of Hyundai’s 2022 net profit. Additionally, the union is urging Hyundai’s management to increase the retirement age from 60 to 64.
Voting Outcome Timing and Further Negotiations
The voting results are anticipated around 6 p.m. (0900 GMT). A Hyundai Motor union official informed a news agency that irrespective of the vote outcome, the union will continue negotiations with the management at the working level.
Rising Life Expectancy and Retirement Age
Experts underscored that rising life expectancy in South Korea, coupled with a weaker social safety net, particularly concerning retirement pensions, has driven workers to seek an increase in the retirement age.
Low Pension Replacement Rates
South Korea’s retirement pension system is characterized by relatively low replacement rates compared to advanced European countries. While European nations typically maintain replacement rates of around 60-70%, South Korea’s rate is approximately 30%, posing challenges for individuals to match their pre-retirement earnings.
Prior Union Action and Industry Sentiment
In July, Hyundai’s unionized workers in South Korea conducted a one-day, four-hour strike in solidarity with their umbrella union’s general strike. However, this was not directly tied to wage negotiations. Analysts suggest that the union might aim to avoid prolonged industrial action due in part to negative public sentiment. The automotive industry remains one of the few bright spots in the country’s relatively sluggish economy.
Potential Disruption and Market Impact
Analysts highlight that a protracted strike is unlikely, mainly due to potential unfavorable public sentiment. While Hyundai Motor’s shares experienced a marginal decline of 0.1%, against the benchmark KOSPI index’s 0.6% drop as of 0234 GMT. Analysts cautioned that if the strike were to persist for more than three days, it could have noticeable ramifications on Hyundai’s operations, accounting for approximately 10% of the monthly output.
The voting outcome holds implications for Hyundai Motor’s operations and its standing within South Korea’s automotive landscape.