Hyundai to learn from Mercedes' wage system

By Park Jin-hai

The labor union and management of Hyundai Motor have agreed to learn from European carmakers’ wage systems as part of efforts to stem chronic disputes over salaries.

A joint committee of six union leaders, five company officials and four outside advisers, is in Europe to study their rivals’ advanced wage systems.

“Unlike in the past, when the union would not talk with the management, the union has been proactive and is taking this seriously,” Korea Industrial Relations Association (KIRA) president Kim Dong-one, accompanying the entourage, told a newspaper.

The committee was set up in November to deal with a broad range of wage issues, including the thorny issue of including regular bonuses in ordinary wages.

“The change has come from the shared sense of crisis,” Kim said. “It is the first time that the Hyundai-Kia Motors’ combined market share at home has dropped below 70 percent since 1998, when Hyundai acquired Kia.”

Committee members will visit Mercedes-Benz, Audi and Volkswagen premises, as well as meeting labor experts including Werner Schmidt of Tubingen University.

Instead of touring production lines, Hyundai Motor’s labor and management are meeting rival automakers’ working-level labor officials, according to Kim.

German carmakers’ wage system is performance-based and job-based, while Japan, after several changes since the1980s, has been moving towards a grade system based on skills and competence development.

In contrast, Korea’s seniority-based system has been in place for decades.

The committee will overhaul the company's wage system by March next year.

Militant unions and increasing labor costs have been cited as one of the major challenges if the carmaker is to achieve this year’s 8.2 million global sales target.

“With the current wage system, it will be hard to beat the fierce competition in the global automotive market,” Kim said.

He said both sides had grudges about the current system.

“The company regards wages as a fixed expense because they are not connected to performance,” he said.

“Labor thinks the base pay is too low and that workers can only earn a decent wage if they work extra hours and night shifts.

“I think that through this trip we could come up with a wage system ideal for the company.”

Meanwhile, Seoul Central District Court on Jan. 16 will rule on a case pitting 23 union members against Hyundai Motor.