Kia Motors Makes Significant Progress in Last Year's Labor Agreement... Renault Samsung Moving Backwards

Kia Motors Labor and Management Reach 2nd Tentative Agreement... Renault Samsung Conflict Remains in 'Fog'

Kia Motors Headquarters in Yangjae-dong, Seocho-gu, Seoul (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] The fortunes of automakers continuing wage negotiations into the new year have diverged. Kia Motors has crossed the final hurdle toward a conclusive agreement by reaching a second tentative agreement between labor and management, while Renault Samsung Motors remains shrouded in uncertainty as labor-management conflicts persist.

Kia Motors announced on the 15th that during the 19th main negotiation session for the 2019 wage agreement held from the afternoon of the 14th at the Sohari plant in Gyeonggi Province, they reached a second tentative agreement. The key additional agreements include ▲ a 1 billion KRW contribution to the in-house welfare fund ▲ adjustment of days off ▲ agreement to operate a joint labor-management task force (TF) regarding overtime work.

The most notable point is the formation of a TF to discuss the restoration of overtime hours. The issue of restoring overtime hours has been a core cause of deadlock in previous negotiations. During the 2017 ordinary wage lawsuit, Kia Motors eliminated 30 minutes of overtime due to concerns over various cost increases. As a result, the union demanded either restoration of overtime to compensate for the decrease in real wages or alternative proposals. In this tentative agreement, labor and management agreed to form a TF to resolve the overtime issue and to prepare specific improvement measures by the end of March.

In the first tentative agreement on December 10 last year, Kia Motors labor and management agreed on ▲ a 40,000 KRW increase in base pay (including step increases) ▲ performance bonuses and encouragement pay at 150% + 3 million KRW ▲ issuance of 200,000 KRW in traditional market gift certificates ▲ a 3 billion KRW contribution to the social contribution fund.

However, for this tentative agreement to be finalized, it must pass the union members' approval vote scheduled for the 17th. Although there has been no precedent of Kia Motors’ second tentative agreement failing the approval vote, the rejection of the first agreement means the situation cannot be taken lightly. The first agreement, which ended an eight-year streak of partial strikes with a no-strike agreement at the end of last year, was rejected with 56% voting against it. Consequently, the union carried out several partial strikes until the 13th.

Unlike Kia Motors, which is nearing a wage agreement, the situation at Renault Samsung is deteriorating. Since December last year, the union has escalated its struggle with guerrilla-style strikes and other tactics. As strike participation rates dropped to the 20% range, the union resorted to unconventional methods to pressure management. In response, management has also taken a hard line, implementing a 'partial workplace closure' starting from the 10th of this month, continuing the strong confrontation between labor and management. Management estimates that losses from strikes ongoing since December 20 last year amount to 6,999 vehicles and approximately 133 billion KRW as of the 10th of this month.

Currently, the Busan plant is reportedly in a tense atmosphere, with signs of conflict even among labor groups. It is anticipated that the end of this month, when the first wages after the strike are paid, will be a turning point. Since wages will be paid at about two-thirds of the amount based on the number of participants in the strike, there is analysis that the strike momentum may quickly weaken.

This content was produced with the assistance of AI translation services.