Hyundai Motor’s unionised workers in South Korea have voted in favour of potential strike action after negotiations with the company over wage increases and extending the retirement age stalled. The union, one of the largest in the country with over 43,000 members, announced that nearly 90% of its members approved the strike action unless the company meets their demands.
The decision to vote for a strike comes after eight rounds of wage negotiations with Hyundai Motor’s management ended in mid-June without an agreement. The union is seeking a minimum basic monthly pay increase of 159,800 won (approximately USD 115.14) and performance pay equivalent to 30% of Hyundai’s 2023 net profit. Additionally, the union is demanding an increase in the retirement age from 60 to 64, citing rising life expectancy and inadequate retirement pension payments as key reasons.
“We are open to negotiations if the management is willing to change their stance,”said a Hyundai Motor union official. The union plans to continue working-level talks with the management to reach a resolution.
Historical context and possible outcomes
If a strike occurs, it would be the first such action in six years related to wage negotiations at Hyundai. Analysts note that while the union has historically voted for strike action annually, this year’s push might be more intense due to the company’s strong performance post-pandemic. “The union might push a bit harder than previous years as the company has been doing well and the pandemic is long gone,” said Chang Moonsu, an analyst at Hyundai Motor Securities.
Strategic considerations for Hyundai
Hyundai Motor’s management could leverage the company’s new U.S. plant, its largest investment outside South Korea, in the negotiations. This plant could potentially reduce Hyundai’s dependence on domestic production, thereby weakening the union’s bargaining power. Analysts, however, caution that it is too early to predict whether the union will actually proceed with a strike this year. Nonetheless, a strike would inevitably impact Hyundai’s short-term sales, especially for popular models sold in the United States, which is Hyundai’s largest revenue-generating market.
Economic and social factors influencing demands
The union’s demands for higher wages and extended retirement age reflect broader economic and social issues in South Korea. With life expectancy on the rise and retirement pensions often falling short, many workers are seeking to extend their working years to ensure financial stability. This trend is not unique to Hyundai but is part of a larger conversation about retirement and economic security in South Korea.
Potential production disruptions
A strike would likely disrupt production at Hyundai’s domestic factories, which could affect the supply of some popular vehicles both domestically and internationally. Hyundai’s strategy to encourage non-striking workers to work overtime may help mitigate some of the production losses, but significant disruptions would still be expected.
The potential strike at Hyundai Motor highlights ongoing tensions between labour demands and management strategies in South Korea’s automotive industry. The union’s push for better wages and extended retirement age underscores broader economic challenges faced by workers. As negotiations continue, the outcome will be closely watched, given its potential impact on Hyundai’s production and sales, particularly in crucial markets like the United States. The company’s new U.S. plant could play a pivotal role in these negotiations, offering a potential counterbalance to the union’s demands.