Hyundai Motor vs. labor union

By Sah Dong-seok

No one can deny that Hyundai Motor is one of the two pillars bolstering Korea Inc. along with Samsung Electronics. Employing nearly 68,000 workers, the nation's top automaker posted 93 trillion won in sales last year. The company's problems are often seen as a harbinger of Korea's economic turmoil.

But there are voices worrying about the future of Hyundai Motor these days. Of course, factors behind these concerns are not new _ the company's plunging market share, China's tough challenge, rising protectionism and falling profitability. More fundamentally, there are growing concerns that Hyundai Motor might be teetering on the brink because of its militant and anachronistic union.

In mid-February, a university professor drew attention by shedding light on how Hyundai Motor, one of the world's leading carmakers, is being run through extensive research. To author a book titled ''The Road Not Taken,'' Song Ho-keun, a famed sociology professor at Seoul National University, frequented Ulsan, the southeastern industrial city where Hyundai Motor's main plants are located, and even visited overseas factories. He also had in-depth interviews with more than 50 employees, ranging from executives to line workers.

The company's true picture featured in the book is quite shocking. Workplaces are controlled by unionists who adhere to three ''absurd'' goals: ''Work less, earn more and prolong employment.'' The ratio of power between union and management at workplaces is 9 to 1, with midlevel employees just walking on eggshells.

What's most pathetic is that the company has been unable to transform its assembly process because of unionists' resistance despite rapid technological development such as electric vehicles and self-driving cars. Given the swift changes in our industrial sector, it is really worrisome that the union is stalling productivity improvements at workplaces, obsessed with its vested interests.

The unionists' lack of a work ethic appears to be more serious than generally known. They finish their eight hours' work load in five hours and fool around for the remaining three hours. There could be a counterargument that this might represent a productivity improvement, but the problem is that unionized workers refuse to take up more of a work load. It is also common to leave troublesome work to non-regular workers who are paid far less.

The consequence is that the assembly line in Ulsan is among the slowest of the company's lines around the world. The number of vehicles made per hour at Hyundai Motor's assembly lines in the United States is twice that of the Ulsan plant.

The most serious problem is that the union cares only about its members _ regular workers _ under the so-called ''insider solidarity.'' The annual income of the 48,000 unionists averages 96 million won, and this is largely at the expense of workers at Hyundai Motor's subcontractors as well as non-regular employees at its plants. To raise funds for the unionists, the company makes it a rule to slash supply prices from its subcontractors, which in turn compels them to cut wages for their workers. That is why the wage gap between large and smaller firms continues to widen.

Not surprisingly, Hyundai Motor has been wrestling with labor unrest annually over the last five years. Work stoppages cost the company 7.3 trillion won in lost production over this period, with a loss of more than 340,000 cars. Last year alone, this lost production was worth 3.1 trillion won.

The biggest problem is that things hardly seem bright. For the first time, Hyundai Motor decided earlier this year to freeze wages for section chiefs and those with higher positions, along with its affiliate Kia Motors. But the union reacted angrily, raising fears that unionists will walk out this year too.

There are plausible reasons for the company to cut costs for labor and invest more for the future. Hyundai Motor has seen its operating profit plunge year after year _ from 8.4 trillion won in 2012 to 7.5 trillion won in 2014, 6.3 trillion won in 2015 and 5.2 trillion won last year.

By contrast, unionists are enjoying handsome privileges. Their paychecks are ensured until the legal retirement age of 60. If a union member dies from an industrial accident, his or her child can be hired. The company also offers tuition fees in full to three children of unionists.

Why Hyundai Motor's future looks all the more dark is that the company has been compelled to join politically motivated strikes as a puppet of the Korean Confederation of Trade Unions (KCTU), the more militant of the nation's two labor umbrella groups to which Hyundai Motor's union belongs.

The KCTU has been advocating only the interests of ''aristocratic'' unions of large companies that form the backbone of its membership while turning a blind eye to the plight of non-regular workers, the biggest labor issue in Korea. Given that liberals are apparently likely to win in the upcoming presidential election, a further empowerment of the progressive labor group is indeed worrisome.

As Prof. Song noted, it's imperative that Hyundai Motor reform itself proactively in order not to face a catastrophe like Hanjin Shipping. But given the union's obsession with short-term gains, it is difficult to paint a rosy picture for the automaker.

Hyundai Motor last week announced a plan to establish a research institute devoted to developing cutting-edge technologies such as robotics and artificial engineering. The plan is intended to nurture new growth engines, but efforts to revitalize the company will be elusive without harmony between labor and management.

The writer is the executive editor of The Korea Times. Contact him at sahds@ktimes.com.