Hyundai Motor’s unionized workers in South Korea have voted to potentially go on strike due to a deadlock in negotiations with the company regarding wage increases and extending the retirement age. The union, consisting of over 43,000 members, revealed that almost 90% of its members supported the idea of a strike unless the company agrees to their demands.
If a strike were to occur, it would be the first of its kind in six years related to wage discussions at the South Korean automaker. This could disrupt the production of some popular vehicles within the country, which Hyundai has been exporting to compensate for slow domestic sales.
A union official from Hyundai Motor expressed willingness to engage in further discussions with the management if they are willing to reconsider their position. The union is planning to conduct working-level talks with the management after a total of eight rounds of wage negotiations took place up to mid-June. However, Hyundai Motor declined to provide any comments on the situation.
Industry analysts suggest that it is premature to determine whether the union will proceed with a strike this year. Nonetheless, if a strike does happen, it could have a significant impact on Hyundai’s immediate sales, particularly in the United States, which is the company’s largest revenue-generating market for its popular vehicles.
In an effort to potentially influence negotiations, Hyundai Motor’s management might leverage the automaker’s new U.S. plant, which represents its most substantial investment outside of South Korea. This move could help reduce Hyundai’s reliance on domestic production.
The union has put forth specific demands, including a minimum basic monthly pay raise of 159,800 won ($115.14) and performance-based pay equivalent to 30% of Hyundai’s 2023 net profit. Additionally, the union is seeking an increase in the retirement age from 60 to 64, citing South Korea’s increasing life expectancy and insufficient retirement pension benefits as reasons for wanting to work longer.
According to Chang Moonsu, an analyst at Hyundai Motor Securities, the union at Hyundai Motor has historically voted for strike action annually. However, this year may see stronger determination from the union members due to the company’s recent success and the waning impact of the pandemic. This may lead workers to push for more substantial compensation this time around.
If production disruptions were to occur at Hyundai’s local plants, management could encourage non-striking employees to work overtime to mitigate the potential impact. The situation remains fluid, and both sides will need to navigate carefully to reach a resolution that satisfies all parties involved.