[Car Talk Forest] Wage Freeze vs Wage Increase... Car Unions Caught in a Dilemma Amid 'Employment Cliff'

Hyundai Motor Ulsan Plant (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] Recently, a notable new organization was established within the Hyundai Motor labor union. This organization is called the Future Change Response Task Force (TF). With a name that could be found in a typical company, this organization was created for the first time by the newly appointed union executive team that launched in January this year. Until last year, the committees for promoting changes in work patterns and improving wage systems within the union were reorganized into Future Response Team 1 and Team 2, respectively. Recently, they even recruited a policy research specialist for this team. Upon closer inspection, the establishment of this team carries significance beyond the existing organizations.

"It deals with comprehensive issues related to changes in the automotive industry such as electrification and automation." When asked what the Future Change Response TF does, this was the answer. The era of future cars, including electric vehicles and autonomous vehicles, signals a paradigm shift in the automotive industry. In particular, electric vehicles have a much simpler manufacturing process compared to internal combustion engine vehicles, leading to predictions that jobs will be directly impacted. Already, companies like GM, Volkswagen, and Audi have announced workforce reduction plans, claiming to proactively respond to changes in the future car market. It is only natural that the union is closely monitoring this.

Concerns about the employment cliff are changing the union. One impressive change is the creation of a separate organization to systematically respond to industrial changes, but above all, there is a noticeable atmosphere showing a more relaxed attitude toward wage issues than before. On the 17th, the Hyundai Motor union introduced the German labor-management crisis agreement through an internal newsletter. The agreement, which extends the wage agreement expiring last month until the end of the year, essentially freezes wages for this year. Instead, the company will pay Christmas bonuses and vacation allowances in installments and support workers facing financial difficulties by accumulating a fund of 350 euros per worker. The union stated, "We should take the German-style crisis breakthrough solution as a model and unite labor, management, and government to protect jobs," and urged, "Let's pay attention to the German labor-management crisis agreement where wages are frozen in exchange for employment guarantees."

When this claim attracted explosive interest, the Hyundai Motor union clearly drew a line, saying, "The intention was to consider the crisis caused by the novel coronavirus infection (COVID-19) from multiple angles and then think about Hyundai Motor's competitiveness. It was not a declaration of wage freeze." However, the fact that the union presented a new model that includes wage restraint as one axis in the face of an employment crisis as a reference case is meaningful enough.

Change inevitably comes with growing pains. Wage freezes are still difficult to gain the support of the majority of union members. Unions at Korean GM and Renault Samsung Motors, which face similar situations, still prioritize basic wage increases in their annual wage negotiations. However, there are more than a few burdens in simply demanding wage increases. In addition to indicators supporting the company's claim of a management crisis due to the prolonged global automotive market slump, this year the COVID-19 pandemic has struck, causing both domestic and international economies to receive the worst performance reports one after another. Rumors of restructuring at other companies are also circulating. Within the union, voices emphasizing labor-management coexistence are growing, creating a dilemma.

An expert in the automotive industry diagnosed the current situation, saying, "The era when employment maintenance was basic and the scale of wage increases was the main issue has passed, and now we are entering an era where employment itself is unstable beyond wage freezes." As the pace of change accelerates, the concerns of automotive unions that must adapt to this will likely deepen.

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