Labor dispute amplifies uncertainties for domestic carmakers
Representatives of Hyundai Motor's union and management attend a meeting on this year's wage negotiation and collective bargaining at the company's plant in Ulsan, Aug. 13. Courtesy of Hyundai Motor
By Nam Hyun-woo
Domestic carmakers are weighed down by growing uncertainties as unions stage standoffs with management in wage negotiations.
Concern is growing on the Korean carmakers, as their domestic sales ― which had been relatively intact amid the COVID-19 pandemic ― show signs of contraction as the coronavirus becomes resurgent across the country. As unions add more woes, the outlook remains grim on their recovery from the current slowdown.
According to industry officials, GM Korea's union plans to file for mediation on its dispute with the management to the National Labor Relations Commission. If the commission suspends mediation after recognizing wide differences in the parties, the union can launch strikes legitimately.
Earlier this month, 80 percent of 7,778 union members voted for labor actions in regards to the protracted negotiations for wages and collective bargaining this year. Since July 22, the union and management have been in talks, but have failed to narrow their differences as the company refuses to accept the union's demand of a 120,304 won hike in monthly salary and additional incentives.
GM Korea has been posting losses for six consecutive years. The company initially expected to snap the losing streak with the Trailblazer crossover, but faced a slowdown in overseas markets.
From January to August, the company sold 228,417 vehicles, down 20.6 percent from a year earlier. Domestic sales increased 10.7 percent from the same period a year earlier, but exports plunged by 26.9 percent during the same period.
As part of its protest, GM Korea's union is reportedly preparing for a joint protest with the unions of Hyundai Motor and Kia Motors.
Hyundai's union, which is the largest in the country, has been showcasing a moderate stance this year in the wake of the COVID-19 pandemic, but returned recently to its conventional hardline approach.
The union said in its recent newsletter that Vice Chairman Yoon Yeo-chul visited the company's plant in Ulsan and told executives there that there will be no salary hike and no incentives at all, citing a slowdown stemming from the pandemic. The union said Yoon's remark was “nonsense” and it will return to conflict unless management comes up with a reasonable plan in this year's salary negotiations.
Hyundai Motor sold 2.24 million vehicles from January to August this year, down 21. 4 percent from a year earlier. The company also logged a 3.9 percent growth in domestic sales during the cited period, but faced a 26.8 percent decline in exports.
Renault Samsung is also taking on labor disputes, as its union plans to join the Korean Confederation of Trade Unions (KCTU), the largest umbrella organization of unions in Korea, as part of its protest against the company in this year's wage negotiation and collective bargaining.
Unlike unions at Hyundai, Kia and GM Korea, Renault Samsung's union is not a member of the KCTU. If Renault Samsung union joins the militant federation, it will exercise stronger influence in negotiations with management.
The union members will vote on whether to join the KCTU later this week.
Renault Samsung sold 84,157 vehicles from January to August this year, down 26.6 percent from a year earlier. It enjoyed a 28.6 percent increase in domestic sales as its new crossover XM3 enjoys popularity, but saw its export plunging by 73.4 percent amid the global market downturn and setbacks in securing production volume for exports.
“Domestic carmakers avoided the worst situation in the first half as sales within the country were intact,” a car company official said. “However, as the pandemic became resurgent and tax benefits end, they are losing domestic momentum while exports remain tepid. As uncertainties loom large, continued labor disputes will drag down carmakers' competitiveness further.”