Hyundai Motor Group is facing critical wage talks with its hard-line labor union as workers are calling for the revision of a 60-year-old wage scheme.
Now, coupled with the recent decision from fellow carmaker GM Korea to include bonuses as ordinary wages, the South Korean auto firm is expected to face an uphill battle in sticking to its guns.
Following a favorable Supreme Court ruling in December, the labor union of Hyundai Motor and other unions across industries have been demanding bonuses and other benefits to be integrated into ordinary pay.
This would result in raising the base salary, which is a sensitive issue for local firms, especially in the labor-intensive automotive industry as the base salary is used to calculate everything from overtime payments to annual raises.
Hyundai Motor would like to keep things as they were, but along with its affiliate Kia Motors, it has become embroiled in a legal battle over the issue with its unions.
On Friday, GM Korea, which also has been fighting its union in court, bowed into the pressure to leave a resounding legal precedent for its peers in the auto sector.
“GM Korea may have feared the additional production loss following new strikes,” said an industry source. GM Korea has already suffered significantly from a production loss after GM’s withdrawal of the Chevrolet brand from the European market early this year.
Another reason GM decided to compromise is because compared to Hyundai, the impact from implementing the new wage scheme would be limited, the source added.
In the meantime, GM’s decision is likely to give the Hyundai Motor union more leverage when it goes into talks with the management later this week, he added.
Hyundai Motor’s union has already allied with other unions of Hyundai Motor Group affiliates, including Kia Motors, on the ordinary wage issue, warning of fierce struggles if their demands are not accepted.
The management has maintained a firm stance against the issue. “Our situation is different from that of GM Korea,” said a Hyundai Motor official.
According to the court ruling, “fixed bonuses” should be considered as workers’ base pay.
But under the company’s wage payment standards, Hyundai pays bonuses only when the employee works for more than 15 days over a period of two months.
“We will wait for the court ruling on our own case,” the official added.
But considering that the first court ruling is expected to come out early next year, industry watchers predict that the carmaker would continue to join the negotiation table to prevent strikes from hampering its local production again.
During the summer strikes last year, Hyundai, along with Kia, suffered a combined production loss of 73,000 vehicles worth 1.5 trillion won ($1.3 billion).
The Hyundai management and union will meet for wage talks on Tuesday and Thursday.
By Lee Ji-yoon (email@example.com)