Ha Eontae CEO Appeals "Overseas Market Collapse and Domestic Demand Contraction"
Proposes Basic Salary Freeze and 130%+500,000 KRW Performance Bonus on Ordinary Wages
On the 27th of last month, Hyundai Motor Company labor and management held the 4th main negotiation session for this year's wage and collective bargaining agreement. (Photo by Hyundai Motor Union)
[Asia Economy Reporter Kim Ji-hee] "In a situation where we cannot neglect investments for future survival, the company is literally borrowing money to continue its survival and future. Without adding or subtracting anything, we must coldly face the reality we are confronted with as it is." (Ha Eon-tae, President of Hyundai Motor Company)
Hyundai Motor Company has presented its first wage proposal for this year's wage and collective bargaining agreement to the union amid the COVID-19 crisis. The proposal includes freezing the base salary and paying 130% of the monthly ordinary wage plus 500,000 KRW as performance bonuses.
According to the industry on the 17th, Hyundai Motor presented this wage proposal during the 11th negotiation held the previous day via video conference at three locations including the Ulsan plant. In addition, the proposal included a COVID-19 crisis overcoming encouragement bonus of 500,000 KRW, 5 shares of employee stock ownership, and 50,000 KRW in traditional gift certificates.
This management proposal appears to reflect concerns about the COVID-19 crisis situation. Ha, the management's chief negotiator, has repeatedly emphasized the difficult business conditions caused by COVID-19 during the ten previous negotiation sessions. On the 15th, through a large poster posted at the Ulsan plant, he stated, "The overseas sales market itself is collapsing, and the domestic market, which was a pillar in the first half of the year, is also shrinking due to the reduction of the individual consumption tax cut rate and social distancing," adding, "Considering the current liquidity crisis and other internal and external environments, we can no longer continue negotiations sluggishly."
The union declared a 'non-acceptance' stance toward the management's proposal. They plan to continue discussions in practical negotiations and schedule the 12th main negotiation session. Since the union has demanded a base salary increase of 120,304 KRW per month (excluding step increases) and a 30% performance bonus based on net profit, focused discussions on wages and performance bonuses are expected.
Within the industry, there is also a forecast that labor and management will find a compromise by partially adjusting the performance bonus. This is because there is a consensus between labor and management regarding the COVID-19 crisis, and both sides have a strong will to reach an agreement before Chuseok. Considering future procedures such as approval voting, a tentative agreement must be reached by early next week to finalize the wage and collective bargaining agreement before Chuseok.
It is positive that significant agreements were reached in the previous negotiations on job-related issues, which were a concern for the union this year, such as the dedicated electric vehicle factory and total employment guarantees. However, the large gap between labor and management positions regarding the senior contract worker fair placement, which the union prioritized as a separate demand, is considered a risk factor.
Meanwhile, Kia Motors' wage and collective bargaining negotiations are not progressing quickly. Issues such as a base salary increase of 120,304 KRW per month, a 30% performance bonus based on last year's operating profit, and securing employment related to future vehicles such as electric cars remain unresolved, and there is no news of a close agreement yet. Furthermore, due to a confirmed COVID-19 case at Kia's Sohari plant the day before, the negotiation schedule inevitably has to be postponed. Kia's labor and management have postponed the 5th main negotiation session scheduled for this week to next week and plan to hold practical negotiations on the 18th.
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