By Lee Hyo-sik
Hyundai Motor's labor union is facing growing criticism for making "excessive" demands in wage negotiations with management, as Korea's largest carmaker struggles with sluggish sales and falling profitability.
Industry analysts say union members should refrain from blindly pursuing their self interests, while urging them to have a forward-looking attitude to find common ground with management.
They are also calling on the labor union not to press Hyundai Motor to offer more concessions by threatening to strike. In 2016, union workers walked out 24 times during collective bargaining, costing the company 3.1 trillion won ($2.7 billion) in lost production.
According to Hyundai Motor Tuesday, the labor union is asking the company to pay 30 percent of its 2016 net profit as incentives and increase the base salary by 180,000 won.
Given the carmaker's 5.72 trillion won net profit in 2016 and its workforce of 67,517, the union is demanding each worker be paid 25.41 million won.
Including raising the base salary, Hyundai Motor would have to pay each employee 30.31 million won in 2017 if it accepts all of the union's demand. This would incur 1.95 trillion won in additional labor costs.
On top of wage increases, the union is asking management to hike the retirement age to 64 from the current 60, and guarantee job security for its members as car production has become increasingly automated.
This is in stark contrast to non-union manager-level employees who accepted a wage freeze in January. Since last October, company executives have been returning 10 percent of their salaries and plan to continue to do so until the carmaker bounces back.
"It's just not right for the Hyundai Motor union to make such excessive demands when things are turning increasingly unfavorable for the company," said an executive at one of the country's major business associations, who declined to be named.
"A 30.31 million won base wage is just too much by any standard. The amount is more than the starting annual salary at the majority of Korean businesses. The labor union, which seems to be interested in only protecting their vested rights, is partly responsible for the tight job market because the hard-line unions like the Hyundai Motor union discourage local businesses from adding new workers to their payrolls."
Hyundai Motor could follow in the footsteps of GM, Ford and others, which were on the verge of collapse following the 2008 global financial market meltdown, according to the official, who said the Korean carmaker will face an increasingly cloudy outlook at home and abroad.
"One of the main reasons why U.S. carmakers fell from grace was self-centered union workers who made reckless demands by threatening to strike. If Hyundai's labor union does not learn this lesson from their U.S. counterparts, they could lose jobs or suffer unwanted consequences," he said.
Hyundai's sales have been declining domestically and abroad amid intensifying competition, the official said. "If its union continues to pursue its self interest and turns a blind eye to the firm's troubles, it will be in big trouble. If the company goes bankrupt, there would be no labor union at all."
Hyundai Motor said it will soon begin this year's wage negotiations.
"The company will faithfully engage in wage talks with union leaders to reach a consensus as quickly as possible," a company official said. "We will carefully study the union's demands and do our best to find a win-win solution for everyone."
In the first three months of 2017, Hyundai Motor's operating profit fell 6.8 percent to 1.25 trillion won ($1.2 billion) from the previous year as its global car sales declined 1.6 percent to 1.09 million cars.
In 2016, Hyundai Motor' sales inched up 1.8 percent to 93.65 trillion won but its operating profit fell 18.3 percent to 5.19 trillion won. It sold 4.86 million cars around the globe, down 2.1 percent from 2015.
Hyundai Motor's labor union is facing growing criticism for making "excessive" demands in wage negotiations with management, as Korea's largest carmaker struggles with sluggish sales and falling profitability.
Industry analysts say union members should refrain from blindly pursuing their self interests, while urging them to have a forward-looking attitude to find common ground with management.
They are also calling on the labor union not to press Hyundai Motor to offer more concessions by threatening to strike. In 2016, union workers walked out 24 times during collective bargaining, costing the company 3.1 trillion won ($2.7 billion) in lost production.
According to Hyundai Motor Tuesday, the labor union is asking the company to pay 30 percent of its 2016 net profit as incentives and increase the base salary by 180,000 won.
Given the carmaker's 5.72 trillion won net profit in 2016 and its workforce of 67,517, the union is demanding each worker be paid 25.41 million won.
Including raising the base salary, Hyundai Motor would have to pay each employee 30.31 million won in 2017 if it accepts all of the union's demand. This would incur 1.95 trillion won in additional labor costs.
On top of wage increases, the union is asking management to hike the retirement age to 64 from the current 60, and guarantee job security for its members as car production has become increasingly automated.
This is in stark contrast to non-union manager-level employees who accepted a wage freeze in January. Since last October, company executives have been returning 10 percent of their salaries and plan to continue to do so until the carmaker bounces back.
"It's just not right for the Hyundai Motor union to make such excessive demands when things are turning increasingly unfavorable for the company," said an executive at one of the country's major business associations, who declined to be named.
"A 30.31 million won base wage is just too much by any standard. The amount is more than the starting annual salary at the majority of Korean businesses. The labor union, which seems to be interested in only protecting their vested rights, is partly responsible for the tight job market because the hard-line unions like the Hyundai Motor union discourage local businesses from adding new workers to their payrolls."
Hyundai Motor could follow in the footsteps of GM, Ford and others, which were on the verge of collapse following the 2008 global financial market meltdown, according to the official, who said the Korean carmaker will face an increasingly cloudy outlook at home and abroad.
"One of the main reasons why U.S. carmakers fell from grace was self-centered union workers who made reckless demands by threatening to strike. If Hyundai's labor union does not learn this lesson from their U.S. counterparts, they could lose jobs or suffer unwanted consequences," he said.
Hyundai's sales have been declining domestically and abroad amid intensifying competition, the official said. "If its union continues to pursue its self interest and turns a blind eye to the firm's troubles, it will be in big trouble. If the company goes bankrupt, there would be no labor union at all."
Hyundai Motor said it will soon begin this year's wage negotiations.
"The company will faithfully engage in wage talks with union leaders to reach a consensus as quickly as possible," a company official said. "We will carefully study the union's demands and do our best to find a win-win solution for everyone."
In the first three months of 2017, Hyundai Motor's operating profit fell 6.8 percent to 1.25 trillion won ($1.2 billion) from the previous year as its global car sales declined 1.6 percent to 1.09 million cars.
In 2016, Hyundai Motor' sales inched up 1.8 percent to 93.65 trillion won but its operating profit fell 18.3 percent to 5.19 trillion won. It sold 4.86 million cars around the globe, down 2.1 percent from 2015.
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