Hyundai Motor to Overhaul Wage System Significantly... Separate System to Be Created for Research Positions

Labor and Management Agree on Step-Based Wage System Improvement
Separate Consultative Body Formed for Research Institute Division
Improvement Plan to Be Prepared by March Next Year

Namyang Research Center, the headquarters of research and development at Hyundai Motor Group

[Asia Economy Reporter Choi Dae-yeol] Hyundai Motor Company’s labor and management have agreed to significantly overhaul the current wage system centered on the seniority-based pay scale. In particular, there is a high possibility of establishing a separate wage system for the research and development sector, where manpower demand has increased in line with industrial transformation. This is interpreted as a move to smoothly respond to the supply and demand of R&D personnel in the software (SW) and IT fields amid the strong trend of automotive electrification and electronic integration.

According to Hyundai Motor and the labor union on the 12th, labor and management recently agreed on improving the seniority-based pay system in broad terms during wage negotiation talks. Previously, the union had demanded improvements to the seniority system, increases in seniority step amounts, and the abolition of dual wage systems as part of their wage demands this year. The company has applied a salary system for office and research positions at the level of manager or higher, classified as responsible managers by past ranks, while all other employees, including production and technical staff, have been under the seniority-based pay system.

Although there are still significant differences in opinions regarding wage increases and bonuses, both labor and management agree on the need to revise the current wage system. Following this agreement, Hyundai Motor’s labor and management will form a Future Change Response Task Force Team (TFT) to find improvement measures by the end of March next year.

Notably, a separate labor-management consultative body will be formed for the research institute sector. The Hyundai Motor labor union is a branch of the Korean Metal Workers’ Union under the Korean Confederation of Trade Unions, and each workplace (Ulsan, Asan, Jeonju, Research Institute, Sales, Maintenance, Mobis) has its own branch with a certain degree of independence. Labor and management agreed that "for the research institute sector, to secure excellent talent and R&D competitiveness, a separate labor-management consultative body (different from the Future Change Response TFT) will be formed to prepare improvement plans for the research job group wage system by the end of March next year."

Chairman Chung Eui-sun of Hyundai Motor Group and Dr. Oh Eun-young taking a commemorative photo with employees at the Mind Counseling Concert [Image source=Yonhap News]

Cars, which were treated as machines for the past century, have seen the importance of electronic devices increase significantly over the past several years. Especially with the integration of advanced technologies such as electrification and autonomous driving, software and IT capabilities have become key competitive factors for automakers. Despite Hyundai Motor being the largest domestic and among the top 4 or 5 global automakers, it has struggled to secure talent, partly because the wage system is not easily adaptable to the increasing wage sensitivity among younger employees.

The union has also seen the voices of office and research staff relatively overshadowed due to the high proportion of older workers in the production sector. Among younger office and general staff, performance bonuses and salary increases were considered more important than extending retirement age. Particularly, the large-scale performance bonuses and salary hikes offered by some IT companies over the past one to two years to attract SW and IT talent have caused resentment among younger employees currently working at Hyundai Motor.

In the recent Hyundai Motor union member vote held on the 1st, the strike approval rate at the Namyang Research Institute Committee, mainly composed of research staff, was 97% (approval among voters), significantly higher than the overall average. The industry views this as a reflection of increased dissatisfaction with wages and bonuses. There have been ongoing rumors inside and outside the company that the company is considering establishing a separate wage table for some research job groups, such as developers.

A company official stated, "We have reached a broad consensus on reforming the wage system, but nothing specific has been decided yet on how to restructure it."

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