"Employment Stability Over Wage Increase"... Changing Trends in Car Labor Unions

Auto Industry Hit Hard by COVID-19... Facing Production and Sales Cliff Crisis
Strong Auto Unions Prioritize Employment Security
Ssangyong Motor Resolves 2020 Wage Negotiations with Industry-First Wage Freeze
Hyundai Motor Union First to Mention 'Wage Freeze and Credit Rating Crisis'

[Asia Economy Reporter Su-yeon Woo] The automotive industry, hit hard by the novel coronavirus infection (COVID-19), is experiencing an unprecedented management crisis, and a wave of change is being sensed even in the completed car unions, which are known as the epitome of strong labor unions. As production and sales have plummeted due to the impact of COVID-19, leading to a shortage of work, the focus of union operations seems to be shifting from wage increases to job security.

According to the automotive industry on the 20th, Ssangyong Motor's labor and management reached an agreement on the '2020 Wage and Collective Agreement Negotiations' centered on a wage freeze at the Pyeongtaek plant on the 17th and held a signing ceremony. Ssangyong Motor completed the wage and collective agreement negotiations the fastest in the industry again this year following last year, marking 11 consecutive years of dispute-free agreements since 2010. This was possible because a consensus was formed between labor and management that the company, which has been in chronic deficit, is 'standing on the edge of a cliff.'

Over the past three years (2017-2019), Ssangyong Motor recorded a cumulative net loss of 470 billion KRW, increasing its deficit. To make matters worse, this year COVID-19 struck, and the parent company withdrew even the planned financial support. A Ssangyong Motor official emphasized, "We agreed on the importance of a stable labor-management relationship above all for the company's business normalization and job security," adding, "From now on, we will proceed with self-help plans without any setbacks and focus all capabilities on increasing sales volume."

However, voices are emerging that for Ssangyong Motor to tighten the reins of survival, not only smooth labor-management relations but also the preparation of additional self-help plans involving painful measures must precede. A professor who requested anonymity said, "Considering the unemployment rate, the government will not give up on Ssangyong Motor," emphasizing, "However, to draw government support, it is essential to accompany long-term measures including restructuring, not just short-term self-help plans."

The Hyundai Motor union, regarded as the 'eldest brother' of automotive unions, is also leaning toward the possibility of a wage freeze this year. On the 17th, through the union newsletter, they introduced the crisis agreement concluded between German metal industry labor and management. Recently, the German Metalworkers' Union decided to extend the validity period of the wage agreement, which expired at the end of March this year, until the end of this year, considering the COVID-19 crisis. Hyundai Motor's union paid attention to Germany's case where the labor side chose a wage freeze considering the COVID-19 crisis, and the government partially compensated workers' wages. They also mentioned that the international credit rating agency Fitch recently downgraded Hyundai Motor's long-term foreign currency issuer default rating (IDR) outlook to 'negative.'

It is extremely unusual for Hyundai Motor's union to mention 'wage freeze' or 'credit rating outlook deterioration' ahead of wage and collective agreement negotiations. From the workers' perspective, it seems they are taking the global economic recession caused by COVID-19 and the automotive industry's crisis awareness very seriously.

Renault Samsung Motor and Korea GM unions also concluded the 2019 wage agreements this month after months of negotiations. The Renault Samsung union, which repeated strikes and negotiations over the past seven months, agreed to a wage freeze, and the Korea GM union agreed to a wage freeze and non-payment of performance bonuses and lump sums after 10 months.

On the other hand, the Kia Motor union, still regarded as a strong executive body, has a somewhat different atmosphere. Although this year's wage and collective agreement negotiations have not yet started, labor and management are experiencing conflicts over production plan changes due to COVID-19. Kia Motor labor and management are negotiating plans to suspend operations at Sohari Plants 1 and 2 and Gwangju Plant 2 from the 23rd to the 29th to respond to the export cliff caused by COVID-19. However, the union suddenly declared a suspension of negotiations on the 17th, expressing concerns about actual wage losses if working days fall short due to this shutdown. The management insists that all wage compensation is inevitable due to the special situation caused by the disaster, drawing attention to further negotiations.

The automotive industry's unions' progressive changes due to the impact of COVID-19 are welcomed by the industry. However, there remains anxiety that if the focus of labor-management relations remains on job security even after COVID-19 subsides, they may once again shift their stance. The Ssangyong Motor union previously emphasized, "If signs of total employment instability are detected, we will not hesitate to fight to protect job security at all costs."

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