Hyundai Motor’s chronic labor disputes, which loom year after year, are taking a toll on the automaker already struggling from declining sales.
Hyundai’s labor union said Tuesday it would stage a strike this year again after their wage negotiations with management collapsed. This time, they are seeking an alliance with Hyundai Heavy Industries’ union.
Hyundai Motor’s union members protest the failure of wage negotiations with the management in Ulsan on Tuesday.(Yonhap)
The recurring strikes from 1987 have been a constant headache for the nation’s largest automaker. Accumulated losses from the protests so far are said to be around 14 trillion won ($12 billion).
Some market experts have said the chronic labor disputes can be attributed to the lack of management ability.
“The top management’s outdated views on his employees have aggravated the relationship further,” Kim Tae-ki, an economics professor at Dankook University told The Korea Herald.
“The management, which gives more weight to technology and products over employees, does not share their vision with them and tries to solve the strikes only with money,” Kim said.
Hyundai Motor is still known for its army-style corporate culture, even as many tech firms including Samsung Electronics seek to get rid of their rigid corporate structures.
According to the latest market survey of 420 Hyundai Motor employees, three key words -- culture, work and army-style -- were identified as the company’s biggest weakness.
The militant labor union, however, is also blamed for the constant disruptions, industry experts said.
“The labor union is only interested in filling their pockets with low productivity,” the professor said.
The average annual salary of Hyundai Motor’s regular workers was nearly 96 million won -- much higher than average local employees -- in 2015, according to the company’s business report. The figure has jumped nearly 100 percent from 49 million won in 2004. Hyundai employees’ wages are known to be even higher than those of German brand BMW, who receive around 76 million won per year.
Despite the high salaries, their productivity is low. The unit per hour of Hyundai Motor’s local factories is around 40 to 50 units while Hyundai’s plant in Alabama in the U.S. is 73 units and Kia’s assembly line in Georgia is 66 units.
This year, the automaker’s labor union asked for a further wage rise of 7.2 percent in basic salary, incentives worth 30 percent of the net income of last year and the right to refuse to be promoted. Without promotion, they can secure their jobs within the fence of the labor union.
“The insistent demands every year is causing simmering anger from Hyundai’s parts suppliers and nonregular workers, who view that the militant and incapable laborers should take what they get,” said Lee Hang-koo, an analyst from the Korea Institute for Industrial Economics & Trade.
Hyundai is known for giving high salaries to its employees and gaining a cost edge in the global market at the cost of their vendors, or parts suppliers.
“The management needs to make the labor union understand the difficulties of their partners firms. If they continue to feel they are unfairly treated, that may lead to serious problems,” Lee said.
In April, Hyundai’s assembly line in Ulsan, in the southeast of Korea, was partially halted. The suspension came as Hyundai Mobis’ second-tier Daejin Unitech, which was reportedly discontent with the first-tier Hanon systems, stopped supplying parts.
By Shin Ji-hye (shinjh@heraldcorp.com)
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