ED Wage deal without strikes

Hyundai Motor case raises hope for 'win-win' strategy

The management and union of Hyundai Motor have reached a tentative wage and collective bargaining agreement without a strike for the first time in eight years. It is significant that the union at the nation's largest automaker agreed to a deal while refraining from staging a walkout that had almost become an annual ritual, in the face of difficult economic conditions.

In the course of discussing wage hikes and working conditions, union workers had previously resorted to strikes. However, such acts invited public criticism as selfish moves at a time when the economic outlook is extremely unclear amid the protracted U.S.-China trade war, and Japan's export restrictions of crucial parts and materials to Korean companies. The “no-strike” wage deal was the result of the union yielding to such a public outcry.

Noteworthy in the tentative deal is a labor-management accord to strive jointly to improve productivity and enhance quality competitiveness. These moves are aimed at getting over downside risks at home and abroad, such as declining demand for cars amid a global business slump and growing uncertainties over the Fourth Industrial Revolution. As is well known, the average time to make a car at Hyundai Motor is longer than those of Toyota and GM. On the other hand, the average wage of the five Korean automakers is higher than those of Toyota and Volkswagen.

The global car industry has entered into massive restructuring, and domestic automakers have also begun a similar process. Unless Korean carmakers upgrade their productivity and quality to the world's top level, they cannot survive these times when the car industry's paradigm itself is changing. That also explains why the recent employer-employee agreement at Hyundai Motor should bear fruit.

The trouble-free agreement can help Hyundai Motor avoid an estimated loss of up to 600 billion won (495 million) that may have arisen from a labor dispute. The valuable experience should serve as an opportunity to creating a “win-win” labor-management culture. We hope the dispute-free deal will spread beyond Hyundai to the unions at other automakers, including Kia Motors and GM Korea, which are now taking steps toward collective action.