Despite Sympathy for the "Corona Crisis"... Dark Clouds Over Labor-Management Negotiations in the Auto Industry

Korean GM and Renault Samsung Unions Both Contemplate Hardline Measures

[Asia Economy Reporter Kim Ji-hee] Dark clouds are gathering over this year’s wage and collective bargaining negotiations in the domestic completed car industry. Both labor and management have reached a certain consensus that the crisis caused by the COVID-19 pandemic is a shared challenge, but there are significant differences in detailed positions. Already, the unions of Korea GM and Renault Samsung Motors have taken tough measures such as strikes and joining the Korean Confederation of Trade Unions (KCTU) to pressure management.

According to the industry on the 31st, the Korea GM union plans to hold a strike vote among its members on July 1-2. Despite six rounds of negotiations over about a month since June 22, labor and management failed to narrow their differences. The union also plans to apply for labor dispute mediation with the Central Labor Relations Commission. If the commission decides to suspend mediation and union members vote in favor, the union will secure the right to strike, moving one step closer to a strike.

The Korea GM union is demanding a basic monthly wage increase of 120,304 KRW this year, following the Metal Workers’ Union’s collective bargaining guidelines. They also insist on a performance bonus payment of 400% of the ordinary wage plus 6 million KRW. On the other hand, management argues that it is difficult to accept such demands given the widespread crisis in the automobile industry due to the COVID-19 outbreak this year.

The Korea GM union has also expressed concerns about future employment. Along with worries about restructuring due to management’s decision to close the parts logistics center, the union strongly demands that alternatives be presented to maintain employment, such as securing production volume at the Bupyeong Plant 2 after 2022 and attracting a new engine plant to the Changwon Plant. In the same context, labor and management have differing evaluations regarding the increasing number of models like the Traverse and Colorado, which are imported and sold rather than manufactured domestically.

The Renault Samsung union has played a strong card by pushing again for joining the Korean Confederation of Trade Unions (KCTU). Joining the KCTU is one of the main pledges of the current union leadership under Chairman Park Jong-gyu, who took office in 2018. Chairman Park also led the establishment of a Renault Samsung branch separate from the existing union in 2011 and spearheaded joining the Metal Workers’ Union under the KCTU. The Renault Samsung union plans to decide on this organizational change through a general vote of members on July 9-10.

The wage and collective bargaining negotiations for Hyundai Motor and Kia Motors, which only began this month due to the COVID-19 situation, are also sluggish. Initially, expectations for a swift agreement rose as the unions showed a different approach from before, but the demands, including a monthly basic wage increase of 1,203,040 KRW and performance bonuses similar to Korea GM, turned hopes into concerns. Especially, as negotiations shifted to an untact (non-face-to-face) format due to the resurgence of COVID-19, discussions have not proceeded smoothly.

At the negotiation on the 27th, Hyundai Motor union’s demand for a “30% performance bonus payment based on 2019 net profit” was met with management’s appeal that “due to worsened business performance caused by COVID-19, even the usual shareholder dividends were not paid.” Management emphasized that “while the workplace claims that the performance bonus is based on the previous year’s results, in reality, bonuses have been paid considering both the previous year’s and the current year’s performance.” The union countered, saying, “Since performance bonuses are included in actual wages, sudden large cuts are not understood at the workplace.”

There are also reports that the union argues that, given the special circumstances caused by COVID-19, the leave allowance should be changed from 70% of the average wage to 100% of the ordinary wage. Management has drawn a line, stating that the damage caused by COVID-19 requires shared pain between labor and management and that fairness issues may arise later.

An industry insider said, “Automobile exports have dropped by more than 30% in the first half of this year alone, making it difficult for each company to easily agree to wage increases.” He added, “Even aside from this, with the full-scale opening of the electric vehicle era next year, the union’s demands for securing production volume and maintaining employment are strong, so it will not be easy for both sides to find common ground.”

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