* Hyundai settles with union in pay dispute
* Outside of autos and financials, Korean unions have lost
By Hyunjoo Jin
SEOUL, Sept 6 Hyundai Motor agreed a
slightly smaller pay rise for its workers than last year, and
lost less cars to stoppages as it faced down one of the few
South Korean unions left with the muscle to squeeze employers.
The world's fifth largest automaker, along with its
affiliate Kia Motors, had suffered stoppages from
Aug. 20, but the company should be able to make up for the lost
output through overtime work once the union members ratify the
The 46,000 union members will vote on Monday on whether to
accept the terms thrashed by their negotiators.
The share market reacted positively on Friday to the deal
reached late the previous night.
Hyundai's stock rose 2.66 percent, to stand 7 percent higher
than it was when the union calling stoppages, which had caused
lost output of over 50,000 vehicles worth 1.02 trillion Korean
The tentative pay settlement, while less than last year's
was still high given South Korea's low inflation and the
company's slow earnings growth.
It included a 5.14 percent wage rise, and bonus incentives
totaling 9.2 million Korean won ($8,400) per employee plus 500
percent of the basic monthly wage.
The unions had demanded eight months pay in bonuses, a gold
medal worth $2,400, one-off payments for long-serving employees
or workers whose children did not go to university.
Executives admit that their labour problems stand out from
the norm in a country where the power of unions has been
substantially curbed by tough labour policies implemented since
"The deal marked a step forward in our labour relations, but
when you ask me whether the problems will be resolved completely
next year, I would say no," said a Hyundai executive who was
briefed about the wage talks, but could not be named due to the
sensitivity of the issue.
Hyundai is not alone struggling with South Korean union wage
demands. General Motors Co. makes 20 percent of its
output in South Korea and plans to gradually wind down
operations as a result of rising labour costs, sources told
But, outside of autos and the financial services sector,
strikes have become a distant memory in South Korea, a country
where once-militant unions could shut down the capital in
violent mass protests.
There were just 17 strike actions during the first half of
this year, half the level seen in the first half of 2012. In
2007, before the government broke the unions' power, there were
115 strike actions.
During their strike there was little public sympathy for
Hyundai's fulltime union workers who, based on current exchange
rates, earn on average $85,600 per year in base pay, overtime
and bonuses. That figure is double what they earned 10 years
ago, according to company filings.
In a bid to reduce its dependency on South Korea and to move
closer to its customers, Hyundai now assembles just 43 percent
of its total global output at home. Its U.S. plant in Alabama is
"Strikes have occurred over the past 20 years and we cannot
change it overnight. We will try step-by-step to gradually turn
the tide," said the Hyundai executive.
Hyundai unions will pick a new leader in late October to
replace Moon Yong-moon, who led workers out on strikes this year
and in 2012, breaking a run of three strike-free years. Moon's
two-year term will expire.
However, Park Tae-ju, a professor at the Employment & Labor
Training Institute, who had advised the company on a new shift
system, saw little evidence that union activism was on the wane
"I cannot see any signs Hyundai's labour movement is
weakening," Park said.
Nationally, the labour movement is in jeopardy. Less than
10 percent of South Korea's workforce belong to unions, half the
level that it was in 1989, according to data from the
Organisation for Economic Cooperation and Development.
But, perceptions remain coloured by South Korea's past
history of industrial strife, according to Lee Sang-jae, an
economist at Hyundai Securities, and it still needs to improve
labour relations to remove old worries from investors' minds.
Hyundai Securities is not part of the car group.