The Crisis Isn't Over Yet... Hyundai Motor Union Goes on Strike

The Resurrected Nightmare of Hyundai Motor Strikes

[Asia Economy Reporter Changhwan Lee] With the Hyundai Motor labor union finally deciding to strike, the possibility of a strike occurring for the first time in three years has increased significantly.

As the automotive industry continues to face unresolved challenges such as COVID-19 and the vehicle semiconductor shortage, the union’s preparation for a strike raises concerns that the company could suffer damages ranging from several hundred billion won to trillions of won.

High Approval Rate: Will a Strike Become Reality After 3 Years?

According to the Hyundai Motor union on the 8th, this year’s strike approval rate was 73.8% of total members and 83.2% of voters. This is the highest approval rate in five years since 2016, when it was 76.5% of total members.

The high strike approval rate among union members this year stems from significant conflicts between Hyundai Motor management and the union over wage increases and retirement age extension. The union demanded a wage increase of 99,000 won and an extension of the retirement age, but the company responded that it was difficult to accept these demands, escalating the conflict.

Over the past two years, no strikes occurred due to various external difficulties, which reportedly increased dissatisfaction among some union members. In 2019, the Hyundai Motor union did not strike due to the impact of the Korea-Japan trade dispute, and last year, the union reached a labor-management agreement without conflict amid the COVID-19 pandemic.

Nevertheless, public opinion toward the Hyundai Motor union’s strike is not favorable because domestic and international challenges remain stacked this year, making future business conditions potentially uncertain again at any time.

In the first half of this year, Hyundai Motor experienced production disruptions of about 70,000 vehicles as major domestic and overseas plants halted operations due to COVID-19 and the vehicle semiconductor supply shortage. The situation has yet to improve, and damage continues into the second half, with the Brazilian plant suspending operations this week.

Additionally, although the company has already proposed an average annual salary increase of about 11.14 million won including bonuses, the union rejected it, drawing criticism for a selfish response that disregards the difficulties faced by other domestic automakers and parts companies severely impacted by COVID-19.

Next Week Is a Turning Point... Potential Damage Up to Trillions of Won if Strike Begins

The Hyundai Motor union has currently applied for dispute mediation with the Central Labor Relations Commission (CLRC), which is expected to decide whether to suspend mediation around the 12th. If the company does not present an additional negotiation proposal, the union is likely to strike after mid-month to pressure management.

However, the union does not insist on striking unconditionally, and the company has shown willingness to reach an agreement before the summer vacation scheduled for early August, so a conflict-free resolution is still possible.

In a statement released that day, the union said, "Even during the dispute period, if the company requests negotiations with proposals that union members can accept, we will engage in negotiations at any time," and added, "We will not give up on the possibility of reaching an agreement before the summer vacation."

To meet the union’s wish of concluding negotiations before the summer vacation, a tentative agreement must be reached by no later than the last week of July.

Industry insiders expect that if final negotiations fail and the Hyundai Motor union actually goes on strike, damages will be unavoidable, ranging from several hundred billion won to trillions of won depending on the number of strike days.

The largest damage Hyundai Motor suffered from a strike was in 2016. According to Korea Investment & Securities, the 24-day strike then caused production disruptions of 142,000 vehicles, amounting to 3.1 trillion won in losses. In 2017, another 24-day strike resulted in about 1.89 trillion won in production losses. This year, damages could snowball depending on the length of the strike.

Professor Hogun Lee of Daeduk College’s Department of Automotive Engineering pointed out, "Currently, many citizens are struggling due to COVID-19, and the company has offered a salary increase of over 10 million won, but the union rejected it, which means they have already lost the justification for a strike."

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