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| Hyundai Motor's management and union members amidst wage negotiations at the carmaker's plant in Ulsan, May 26. Courtesy of Hyundai Motor union |
By Baek Byung-yeul
Hyundai Motor is set to avoid a union strike for the third straight year, as the automotive giant reached a tentative agreement regarding a wage increase and improvements in working conditions on Tuesday night.
At a time when carmakers are being urged to shift their focus to electric vehicles from conventional gasoline-powered vehicles, as well as undergoing production disruptions due to the automotive chip shortage, industry analysts said on Wednesday that the tentative agreement is a welcome one that can reduce any lingering risks in the company.
"Though the agreement needs to be passed in a popular vote by union members, avoiding a strike for the third consecutive year is a positive move for both the company and its union," said Kim Pil-soo, an automotive technology professor at Daelim University College.
During Tuesday's negotiations, the two sides reached a deal that includes a 75,000 won ($65) increase in the monthly base salary, a bonus of 200 percent of the monthly salary and an additional bonus of 3.5 million won.
To boost job security, the two sides also agreed that plants and research centers based in Korea will play a leading role among the automotive giant's business facilities across the globe. The deal will become effective if the union members vote to accept the terms on July 27.
Hyundai Motor said Wednesday that it "will focus our capabilities on overcoming the immediate crisis, based on cooperative labor relations, as the industry is in a period of great transition."
The company added, "We will work together to focus our capabilities on becoming a global top-tier company in the future mobility era by increasing disaster prevention and quality competitiveness."
Hyundai Motor and its union reached wage agreements without strikes in 2019 and 2020, while the industry was struggling with a series of major issues, such as a trade dispute with Japan and the COVID-19 pandemic. Hyundai Motor's union negotiations have gained much attention here, as around 2 million people are involved in the automotive business.
"In terms of employment, the automotive industry is very important, as it employs far more people than the semiconductor industry, so the two sides reaching a deal is a welcome thing," an industry representative said.
However, there have been doubts that the company will be able to resolve its labor issues smoothly in the long term, as the company is being pressured to downsize its workforce.
"Considering Korea's rigid labor market, the country has been regarded as a very difficult place for companies to do business," Kim said.
"In the process of strengthening the electric vehicle industry, it is essential to reduce personnel, but there will be many problems in the future as it needs to be reduced by about 30 percent to 40 percent. If this issue is not resolved in the future, it will be a great obstacle to Korea's industrial development."
