Car Union Enters Wage Negotiations... Adding Fuel to Inflation Pressure?

Wage Increase Linked to Inflation a Key Issue
Conflicts Over Ordinary Wages and Employment Insurance System Remain

[Asia Economy Reporter Kiho Sung] The automotive industry will begin full-scale wage and collective bargaining negotiations starting this week. This year, the key issue is that the automotive labor unions are demanding wage increases linked to inflation amid rising inflationary pressures. There are also many contentious issues between labor and management, such as ordinary wages and the wage peak system, so it is expected that reaching an agreement in a short period will not be easy.

According to the automotive industry on the 20th, Kia labor and management will start full-scale wage and collective bargaining negotiations beginning with a meeting on the 22nd at 2 p.m. The Kia union is demanding ▲a basic wage increase of 162,000 KRW (excluding seniority increments) ▲payment of 30% of operating profit as performance bonuses ▲dualization of cafeterias and increase in snack expenses ▲operation of shuttle buses for commuting. The union stated, "In line with last year's record-high performance, the union negotiation team and delegates will do their utmost to ensure fair performance distribution reflecting maximum achievements, not just verbal promises."

Hyundai Motor labor and management, who completed their initial meeting on the 10th of last month, will enter the 11th round of negotiations on the 21st. Since they completed one full review of the agenda during the previous 10 rounds, the power struggle between labor and management is expected to begin this week. The Hyundai union is demanding ▲a basic wage increase of 165,200 KRW (excluding seniority increments) ▲employment stability through new hires and extension of retirement age ▲payment of 30% of last year's net profit as performance bonuses ▲domestic establishment of future car factories. Their wage demands are similar to those of the Kia union.

Korea GM labor and management will also begin wage and collective bargaining negotiations starting with a meeting on the 23rd. This year's negotiations are delayed compared to previous years, apparently due to a gap caused by a change and appointment of the president. Considering the union's explanation of demands, the company's position, and the August vacation and construction period, discussions on key issues are expected to start around mid-August.

The Korea GM union is demanding ▲a basic wage increase of 142,300 KRW (excluding seniority increments) ▲performance bonuses amounting to 400% of ordinary wages ▲development prospects for each plant including Bupyeong Plant 1 and 2, and Changwon Plant ▲abolition of the cap on length-of-service allowances ▲increase in position allowances.

The Renault Korea union, which was the first among completed car manufacturers to start negotiations on the 3rd of last month, is demanding ▲a basic wage increase of 97,472 KRW (excluding seniority increments) ▲a one-time payment of 5 million KRW ▲an increase in regular bonuses from the current 500% to 600% ▲an increase in summer vacation allowance from 800,000 KRW to 1 million KRW.

The automotive industry is showing reluctance toward the unions' wage increase demands. Although the unions are citing inflation as a reason for wage hikes, there is concern that this could trigger inflation issues. An executive from a completed car manufacturer said, "Wages have already been raised significantly over the past two years," adding, "The unions are insisting on wage increases linked to inflation, but if large-scale wage hikes materialize, it will create inflationary pressure contrary to government policy." In fact, the government is also requesting restraint on wage increases. Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho recently stated at a meeting with economic leaders, "Competitive wage increases could cause a vicious cycle of inflation, so the business community should absorb price increase factors as much as possible."

Furthermore, recent rulings on ordinary wages and the wage peak system remain sources of conflict. Another industry official expressed concern, saying, "If labor and management fail to coordinate their opinions on wage and collective bargaining, conflicts over ordinary wages and the wage peak system could escalate," adding, "Since both sides find it difficult to compromise, negotiations could be prolonged."

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