"Preparing for the Future" United Auto Workers and Management Join Hands

Hyundai Motor Labor-Management Tentative Agreement on Wage and Working Conditions
5 Consecutive Years Without Disputes... First Since Union Establishment
Attention on Other Sites Like Kia and Korea GM
"Bold Support for Low Birthrate" New Paradigm in Labor Negotiations

Hyundai Motor Company's labor and management have reached a tentative agreement on wages and collective bargaining. The negotiations concluded three months after their initial meeting in mid-June.

Although there were concerns that this year's negotiations would be challenging, the company proposed the highest wage increase in its history, and both sides agreed to discuss difficult issues later, allowing them to find common ground sooner than expected. This is interpreted as a response to heightened concerns inside and outside the company amid the transition to future automotive industries such as electrification. Attention is focused on whether this trend will spread to other workplaces, including Kia, which is still in negotiations, and Korean GM, which has already reached a tentative agreement.

The 2023 Hyundai Motor labor-management collective bargaining meeting held last June

"Preparing for the Future Rather Than Power Struggles" Hyundai Motor's Tentative Agreement

According to the tentative agreement announced by Hyundai Motor's labor and management on the 12th, the basic salary will increase by 111,000 KRW (including seniority increments), and a performance bonus of 300% (of the basic salary) plus 8 million KRW will be paid for last year's results. Additionally, a special incentive of 2.5 million KRW, a year-end business goal achievement incentive of 100%, and stocks and gift certificates will be provided. The company explained that this corresponds to an average annual salary increase of about 12%. In 2013, when Hyundai Motor's performance was good, employees received about 20 million KRW more per person, but this year the amount is even higher.

The wage increase was expected to be significant even before this year's labor-management negotiations began. Despite production disruptions caused by COVID-19, the company's profitability improved due to reduced expenses and favorable exchange rate effects. The company is posting record-high operating profits this year as well, following last year. The annual salary increase agreed upon last year (including allowances, 108,000 KRW) was the largest ever, and this year it has increased further.

Notably, during this year's wage and collective bargaining negotiations, the previously agreed future car investment plans were refined in more detail, and a special agreement for future growth was also made. To apply the advanced integrated casting process, construction of a factory will begin next year, and a separate multifunctional and multipurpose factory will be established for high-end and limited-edition models. Mass production is expected to be ready as early as 2026.

Hyundai Motor Ulsan Plant Myeongchon Main Gate

The company also decided to manufacture next-generation powertrain components such as hydrogen fuel cells and batteries in-house, which were previously supplied by affiliates or external partners. Additionally, 500 technical (production) workers will be hired next year and 300 more the following year, adding to the 700 agreed upon in last year's negotiations. A special training program will be created for employees who will work at the new electric vehicle-exclusive factory scheduled to start operations in 2025. Labor and management explained, "Amid external risks such as global economic recession, increased market uncertainty, the Russia-Ukraine war, and high oil prices and inflation, we have agreed to maintain a stable production system to lay the foundation for overcoming the crisis."

The initially contentious issue of extending the retirement age has been postponed for discussion until the first half of next year, considering government policies and social awareness changes that may lead to legal amendments. The labor union is demanding to raise the current retirement age from 60 to 65. Hyundai Motor's labor and management agreed to maintain the current skilled reemployment system.

Ioniq 6 being produced at Hyundai Motor's Asan plant

Although some demands initially requested by the union were excluded, the reason for reaching an agreement is interpreted as the increasingly fierce competition for leadership among domestic and international mobility companies. Both sides judged that delaying through power struggles would benefit neither party. The industry views that changes in factors determining corporate competitiveness, such as electrification and software, as well as clear signs of declining demand for finished vehicles both domestically and overseas, influenced this decision. Hyundai Motor's labor and management have achieved five consecutive years of tentative agreements without disputes, a first since the union was established in 1987.

This tentative agreement at Hyundai Motor is expected to have a positive impact on Kia, which had previously broken off negotiations but plans to resume on the 14th, as well as Korean GM, where a union member vote on the tentative agreement is scheduled by the 13th. Korean GM also included in its tentative agreement a commitment to proceed with discussions on future vehicles as a procedure for the company's long-term growth and employee employment, sharing this with the union by the end of the year. Hyundai Motor, Kia, and Korean GM had been on the brink of strikes due to unresolved differences in negotiations.

Last month, a low birthrate and childcare support labor-management TFT meeting was held at Hyundai Motor Company's Jeonju plant. [Image source: Yonhap News]

"Third Child 5 Million KRW" Labor and Management Address Low Birthrate Concerns

Another notable aspect of this year's Hyundai Motor negotiations is the effort to address the social issue of low birthrates by finding common ground. Hyundai Motor's labor and management formed a temporary task force (TFT) for low birthrate and childcare support and issued a special agreement. This is considered an unprecedented move in private sector labor-management negotiations, presenting a new paradigm.

Under this agreement, the childbirth congratulatory payment for Hyundai Motor employees has increased from the previous 1 million KRW to 3 million KRW for the first child, 4 million KRW for the second, and 5 million KRW for the third. A mom-and-dad voucher system provides 500,000 KRW for the first child and 1.5 million KRW for the third child or more. Separately, 2.4 million KRW is provided for education expenses for children aged 4 to 5, and a first-time school attendance voucher ranging from 500,000 to 1.5 million KRW is given.

Along with generous financial support, paid leave for infertility treatment has been extended to five days, and infertility treatment expenses will be supported up to 1 million KRW per session with no limit on the number of sessions. Parental leave and reduced working hours during childcare can be combined and used for up to two years, with an additional one-year extension for reduced working hours. The company plans to increase subsidies for reduced working hours, promote parental leave, and engage in mid- to long-term discussions regarding workplace daycare centers.

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