COVID-19 Still Here... Workers Filing Current + Future Claims

This Year’s Hatu, Employment Retention Amid Industrial Transition Emerges as a Key Issue

On the 10th, a day before the Lunar New Year holiday, imported cars are waiting to be shipped at Pyeongtaek Port, as seen from a Seoul Metropolitan Police Agency helicopter. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Yu Je-hoon] This year’s wage and collective bargaining proposals put forward by domestic automakers’ labor unions can also be seen as a ‘COVID-19 bill.’ Last year, amid the global COVID-19 pandemic, each labor and management agreed to ‘pain sharing’ through wage freezes, but this year, the unions are aiming to achieve wage and collective bargaining results they couldn’t fully secure last year.

Within the industry, concerns are growing that the ‘premature’ bill presented by the unions amid the COVID-19 crisis and the global electrification trend rapidly transforming the automotive industry could negatively impact preparations for the future car era and employment stabilization. The business community is increasingly voicing that the risk of labor disputes starting with the automotive industry could spread throughout the industrial sector, worsening vitality, and that building cooperative relationships between labor and management is urgent.

Still Incomplete... Labor Presents Bill

The Hyundai Motor Union has decided to demand a basic wage increase of 99,000 KRW and a performance bonus payment of 30% of last year’s net profit from management this year. Additionally, demands include extending the retirement age linked to the National Pension and agreements on employment retention amid industrial transition. The Kia union has also finalized a similar level of wage and collective bargaining proposals.

The industry expects this year’s wage and collective bargaining to unfold differently from last year, when wage freezes were chosen. Last year, Hyundai Motor’s union chose a no-dispute agreement, and Kia’s union, despite ups and downs including strikes, also opted for a wage freeze; however, the approval rates for the wage agreement in union member votes were only about 52% and 58%, respectively. Given the strong performance continuing from the beginning of the year due to the base effect of COVID-19, it means the unions and members may present a COVID bill.

In particular, Hyundai Motor’s union executive elections are scheduled for the end of this year, and recently, a union for office and research staff organized mainly by the MZ generation has emerged, raising the possibility of intensified competition for clarity. In fact, Hyundai Motor’s union has prepared demands related to improving treatment for research institute and general staff in this collective bargaining proposal.

The labor disputes of the three foreign-affiliated companies on the brink are also serious. The Korea GM union has demanded a basic wage increase of 99,000 KRW and a performance bonus payment of 150% of the ordinary wage in this wage agreement proposal. This comes amid a 316.8 billion KRW operating loss last year and seven consecutive years of deficits. Especially, Korea GM seemed to catch a breath recently with the success of the Trailblazer, but due to the shortage of automotive semiconductors, the operating rates of Bupyeong plants 1 and 2 and Changwon plant have been reduced to half, making even that difficult to expect.

Renault Samsung Motors labor and management have not even concluded last year’s wage and collective bargaining and are confronting each other with strikes and partial workplace closures. In the case of SsangYong Motor, since it is undergoing corporate rehabilitation procedures, conflicts are not immediately surfacing, but the core issue of the rehabilitation plan, ‘workforce restructuring,’ remains a lingering spark.

Concerns are also strong within the industry. A source from the completed car industry said, “This year’s strong performance largely reflects the base effect of COVID-19, and future prospects are difficult to gauge due to the shortage of automotive semiconductors,” adding, “Especially for the three foreign-affiliated companies, concerns are high as they are experiencing management difficulties amid sluggish sales.”

Employment Retention During Industrial Transition Also a Major Issue

From this year’s wage and collective bargaining, employment retention amid future industrial transition is likely to emerge as a key issue. The Metal Workers’ Union has also presented an industrial transition agreement as a common demand in this year’s wage and collective bargaining proposals.

The reason each company’s union is raising the industrial transition agreement is that the global trend toward eco-friendliness and electrification is shaking the employment structure of the automotive industry to its roots. Electric vehicles have about 63% of the parts and about 70-80% of the production man-hours compared to internal combustion engine vehicles. The more the production share of electric vehicles increases among all completed cars, the more employment inevitably decreases.

Accordingly, Hyundai Motor’s union has demanded a ‘future agreement due to industrial transition’ in this wage and collective bargaining. Specifically, this includes domestic research and production of key future car parts such as batteries and motors, domestic production of parts and finished products in future industrial fields, and the establishment of high-skilled and high-function job programs related to future industries. Korea GM’s union has also presented a future development plan and demanded commitments such as mixed production of electric and internal combustion vehicles at Bupyeong Plant 2.

Within the industry, voices are emerging that job retraining and stakeholder coordination must be expedited as the growth of future cars, including electric vehicles, is steep. Lee Hang-gu, a research fellow at the Korea Automotive Research Institute, said, “For example, regarding the contentious U.S. investment, there is a prospect that the U.S. government may impose penalties on batteries and completed cars produced in other countries, so it is not a matter that can be approached simply,” adding, “Regarding job transition and employment, there may be differences in positions within the union between new and old generations, between production and office workers, and between companies, so a cautious approach is necessary.”

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