Hyundai Heavy Industries' Labor-Management Negotiations Stalled by Split Two Years Ago... Will Talks Prolong?

2019·2020 Tentative Labor-Management Agreement Faces More Opposition
Residual Tensions from Corporate Split Labor Disputes Not Fully Resolved

The Hyundai Heavy Industries labor union is counting the votes of union members on the tentative agreement for the 2019-2020 wage and collective bargaining negotiations at the Ulsan headquarters gymnasium on the 5th.

[Asia Economy Reporter Choi Dae-yeol] The tentative agreement on wages and collective bargaining, which Hyundai Heavy Industries' labor and management had prepared after more than two years, was rejected in a union member vote. Although many expected it to pass given the prolonged negotiations and the fatigue among union members, the voting results revealed greater dissatisfaction with the tentative agreement.

According to the union, out of 8,123 union members who participated in the vote on the 5th, 4,557 (56%) opposed it. The company's union conducted separate votes by dividing into subcommittees for each business division. While Hyundai Electric and Construction Equipment, which have relatively fewer union members, had more than half in favor, 58% of members in the Heavy Industries division voted against it. The approval condition required a majority attendance and a majority vote in favor, with all three subcommittees needing to exceed 50% approval for the agreement to pass.

After a difficult process to find common ground for the first time in about 1 year and 9 months since May 2019, the agreement was overturned, meaning negotiations must resume. However, since it is unlikely that the differences will narrow further, the process is expected to be prolonged. If the current union leadership takes responsibility and steps down or if negotiations slow down, there is speculation that the process could extend beyond this summer.

In 2019, the wall of the Ulsan University Gymnasium, where the Hyundai Heavy Industries shareholders' meeting was held, was damaged, and chairs were scattered around. At that time, due to conflicts between labor and management over the corporate split, the venue for the shareholders' meeting was hastily changed and held elsewhere.

Partial Agreement on Base Salary Increase and Performance Bonuses,
But Disagreements Persist on Split Compensation and Disciplinary Actions

Many union members, especially those belonging to the Hyundai Heavy Industries subcommittee, voted against the tentative agreement because they were dissatisfied with it. The rejected tentative agreement included a partial increase in the 2019 base salary, performance bonuses, incentive payments, collective agreements covering special leave, and a joint labor-management declaration. It also contained provisions to reinstate some union members (three people) who were dismissed during the 2019 corporate split process and to cancel lawsuits including complaints, accusations, and damages claims. The reinstatement of dismissed workers was reportedly the most sensitive issue during labor-management consultations.

Among some union members, there was a sentiment that compensation should be paid due to the corporate split, but this was not reflected. More than 1,400 union members were disciplined due to conflicts with the company during the split, and while the union decided not to file relief requests with authorities regarding this, there was considerable resentment over the fact that the disciplinary actions themselves were not nullified. The friction that arose during the 2019 split process has not been properly resolved, hindering the wage and collective bargaining agreement, i.e., labor-management consensus.

President Han Young-seok of Hyundai Heavy Industries (second from the left) and Cho Kyung-geun, head of the Hyundai Heavy Industries labor union branch (third from the left), along with the labor-management negotiation delegation, are shaking hands at the wage and collective agreement introductory meeting on November 3 last year.

From the union's perspective, they would need to include more demands than currently proposed, but this is a difficult position. The corporate split, which the union opposed, has been completed, and the acquisition of Daewoo Shipbuilding & Marine Engineering is only awaiting merger reviews by various governments. Simply put, there is no 'card' to induce concessions from management in the negotiation structure. Additionally, due to the COVID-19 pandemic last year, sales shrank and operating profit dropped to about a quarter compared to the previous year, making it difficult for the union to increase demands unconditionally.

However, there is also a prospect that labor and management could make mutual concessions, considering that the lack of orders last year could lead to a serious shortage of work by the end of this year. Previously, in 2018, a tentative agreement for two years (2016 and 2017) was rejected in the first vote but passed in a second vote a month later.

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