It is meaningful that the labor union at Hyundai Motor has struck a deal with the management without staging a walkout this year. On Monday, the union agreed on a freeze in basic salary in return for an incentive payment of 2 million won and a 300 percent bonus for each worker. Two days later, the agreement won approval in a vote among 42,146 autoworkers of the 55,000-strong union.
It marked the first time the union has successfully wrapped up its strike-free collective bargaining in 15 years. The basic wage freeze is also the first of its kind since the autoworkers organized the trade union in 1987. Therefore, the deal is seen as a first step for the union and the company to move toward ``industrial peace." First of all, it is expected to help the auto union shake off its long-held image as one of the nation's most militant labor unions.
We hope that the Hyundai case will contribute to forging cooperative ties between workers and employers in the nation. In fact, frequent labor disputes and violent clashes between striking unionists and police have tarnished the reputation of the nation, forcing foreign investors and businessmen to shun away from South Korea. Both unionists and employers have been held responsible for failing to settle their disputes through peaceful means.
Now, both sides should change further to create a labor culture to be based on dialog and compromise. No local company can become a leader in the global market without developing a collaborative relationship with its workers. It goes without saying that Korea Inc. would stand little chance of surviving ever-fiercer international competition in the era of globalization unless it adopts a win-win strategy with unionists.
In this regard, the Hyundai autoworkers' peaceful deal has significant ramifications not only on the world's fifth-largest carmaker but also on the nation's industrial sector. It also reflected the stark reality of the auto industry following the unprecedented global economic crisis. The union and the management must have shared the view that they can no longer waste time and effort on attritional confrontations at a time when the collapse of America's major automakers is changing the landscape of the global car industry.
Hyundai said labor disputes bring 555.6 billion won of losses to the company every year with its cumulative damages amounting to 11.7 trillion won since 1987. This means that the firm can save a huge amount of money by averting strikes and other disputes with the union. Hyundai has so far successfully tided over the worldwide crisis by taking advantage of its competitive edge, aggressive marketing abroad and the devaluation of the local currency. The government's tax incentives for drivers to replace their aged car with new ones have also help the carmaker fare well.
But, there exists criticism that Hyundai has abused the tax incentives to reach the collective deal which calls for the provision of 15 million won to each worker. Despite the salary freeze, the union and the management collaborated in sharing profits which were partly made by the government support package.