Issues Pile Up... Kia Faces Labor-Labor Conflict Over New Car Discounts

US IRA and Production Disruptions Pose External Challenges
Discount Rate Reduced from 30% to 25%, Age and Frequency Restrictions Applied
Executive Employee Union Sends Certified Letter to Current Union Leadership
"Issues with Content and Procedures in Collective Agreement Revision"

Kia Gwangmyeong Plant Overview

[Asia Economy Reporter Choi Dae-yeol] Conflict has erupted within the Kia labor union over the retired employees' new car discount system. This issue is cited as one of the reasons why the recent tentative agreement between labor and management was rejected. Amid ongoing supply chain disruptions for several years and pressing issues such as the U.S. Inflation Reduction Act (IRA), concerns about declining competitiveness are emerging as internal union strife adds to the challenges.

According to industry sources on the 6th, the Hyundai Motor Group Executive and Staff Union sent a certified letter the day before to the current Metal Workers' Union Kia Branch titled "Comments on the 2022 collective agreement with deteriorated working conditions related to the lifetime employee ID card." The Executive and Staff Union claimed, "The wage loss due to the deterioration of working conditions under the revised collective bargaining agreement will amount to about 100 million KRW."

This union was formed last year, mainly composed of office workers at the manager level or higher and retirees. The newly established small union officially raised concerns that the current union, mainly composed of production workers, had mishandled the revision negotiations of the collective agreement.

Recently, during wage and collective bargaining negotiations, Kia labor and management coordinated to reduce benefits for long-term retired employees when purchasing new cars and put this to a vote. This system, known as the lifetime employee ID card, allows employees who have worked for more than 25 years to receive a 30% discount on a car purchase once every two years after retirement.

Kia Headquarters in Yangjae-dong, Seoul

In this year's negotiations, labor and management agreed to impose an age limit of 75, extend the purchase cycle to three years, and reduce the discount rate to 25%. The part of the tentative labor-management agreement containing these changes to the collective agreement was rejected by about 58% of union members in a vote on the 2nd. The Executive and Staff Union opposed this, stating that "existing retirees must also go through a consent procedure" and that "a clause stating that the new regulations cannot be applied retroactively to existing retirees" should be included.

While Hyundai Motor labor and management, from the same group, appeared to have reached a four-year consecutive wage negotiation agreement without disputes before the summer vacation, at Kia, the situation has escalated into 'union-on-union conflict,' raising concerns that this year's wage and collective bargaining might fail as it did last year. Kia's union held a dispute countermeasure committee meeting the day before and decided to determine additional response measures at the second meeting on the 26th. This means the official negotiation channel between labor and management has been inactive for nearly a month.

Chairman Chung Eui-sun of Hyundai Motor Group (center in the photo) attending the New York Auto Show held in April this year

Especially recently, while Hyundai Motor Group Chairman Chung Eui-sun and other executives hurriedly visited the U.S., and senior government officials are also working hard to devise countermeasures against the U.S. Inflation Reduction Act, the union is preoccupied with internal conflicts, drawing unfavorable attention from outside.

One of the countermeasures being discussed involves producing eco-friendly vehicles locally in the U.S., which requires many negotiations between labor and management, including volume transfers. However, as wage and collective bargaining negotiations drag on, it is becoming difficult to address these issues. An industry insider said, "Even considering that internal union conflicts are common in large workplaces, the recent situation is serious, so it is necessary to quickly find common ground."

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