Despite being the highest paid autoworkers in the world with and having one of the costliest wages-to-sales ratio, the Hyundai labor union in Ulsan, South Korea is pushing forward with their demand for a 7.84% wage hike, guaranteed job security until age 65, and 30% of the company’s net profit to be put aside for bonuses.
Putting aside the fact that Hyundai’s second-quarter net profit plunged 23.8 percent from last year, a yes-or-no vote was held by 48,000 unionists at Hyundai Motor plants across the country on Wednesday, with 77.9 percent calling for a strike.
Considering the tough business conditions facing the company, it is unclear whether the workers will actually go on strike or are just using the vote as leverage. Historically the union is no nonsense when it comes to insisting on demands. If they pushes forward with the recent vote and do strike, it would be the fourth straight year of industrial action for the company.
At issue is a proposed wage peak system by Hyundai to reign in costs. The proposed system asks workers to accept a reduced salary in exchange for working until a retirement age to be set by the company. This is also part of a wider government plan to alleviate high youth unemployment.
Hyundai, much like its American counterparts decades ago, is trying to replace a seniority-based wage structure with a merit based system.
Some worry that the union is pushing too hard, and that Hyundai could eventually say enough is enough and pull up operations altogether.
Business Korea reports:
According to industry data, the 64,956 employees of the automaker, including 4,129 temps, received an average salary of about 97 million won (US$82,012) per person and recorded an average period of employment of 16.9 years last year.
The average wage was much higher than that of the employees of Toyota (8.38 million yen or US$69,434) and that of those working for Volkswagen (64,783 euros or US$73,121).
Last year, Korean automakers posted a wages-to-sales ratio of 12 percent, exceeding that of Toyota and Volkswagen each by a margin of 4.2 percentage points and 1.4 percentage points.
Hyundai opened its massive Ulsan manufacturing complex 47 years ago yet. Even as it continues building plants overseas, the company has not opened another domestic factory since 1996.
