Hyundai Motor union demands higher wages, shorter hours

Workers seek 8.2 per cent rise in the monthly basic wage

SEOUL (Reuters) — Hyundai Motor Co's South Korean labour union has demanded higher pay and bonuses and more cuts to working hours, as the automaker heads into annual wage talks in June under the threat of industrial action.

Any strike action in South Korea — which makes nearly 40 percent of Hyundai vehicles sold globally — could disrupt supply around the world as the company fights to reverse a fall in profits linked to the stronger won and competition from the likes of Volkswagen AG.

New union boss Lee Kyung-hoon is seen as a moderate but he has not ruled out industrial action, telling a union newspaper in February that he was "willing to risk waging an all-out war" to get a better deal for workers.

Hyundai, the world's fifth-biggest automaker along with its affiliate Kia Motors Corp, has been hit by strikes in all but four of the union's 27-year history, leading to lost production worth 14.4 trillion won ($14.06 billion).

Union delegates finalised their demands late May 14, including a 8.2 percent rise in the monthly basic wage and performance pay totaling 30 percent of the automaker's 2013 net profit distributed to workers.

The most contentious issue would be expanding the definition of the regular wage, which is the basis for calculating overtime and other payments to the firm's 47,000 workers in South Korea.

The union is also calling for daily working hours to be trimmed by one hour to 16 from 2015, after the automaker scaled them back from 20 to 17 starting from March last year.


E*Trade Korea auto analyst Kang Sang-min said Hyundai faced an "uphill battle" to reach an agreement with the union over tricky issues like the regular wage.

"A potential disruption to output will dampen investor sentiment, already hurt by Hyundai's decelerating growth," he said.

Hyundai, which was an outperformer during the 2009 global economic downturn, has posted lacklustre earnings in the past couple of years. Its January-March net profit slipped to its lowest in five quarters, missing estimates.

The strengthening won and stiffer competition from rivals' refreshed models has seen Hyundai's U.S. market share drop from a record 5.1 percent in 2011 to 4.4 percent this year.

The labour talks will be the first since Lee took the reins of South Korea's biggest union in December, stirring hope of steadier industrial relations after his predecessor called strikes in two consecutive years.

Lee led the union during a rare, strike-free period from 2009 to 2011, although a company spokesman said his previous record counted for nothing in the forthcoming negotiations.

"The current union leader is seen as a moderate, but he is still a unionist," the spokesman said.

Kia Motors is also preparing separate annual wage talks with its South Korean union, while General Motors' South Korean unit kicked off annual wage negotiations in late April.

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