Hyundai Motor Labor and Management Tentatively Agree on 'Wage Freeze' This Year... Second Consecutive Year of Dispute-Free Agreement

"Focus on Co-survival with Partners over 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] Hyundai Motor Company’s labor and management have reached a tentative agreement on the 2020 wage negotiations, centered on freezing the base salary. This wage freeze is the third in Hyundai Motor’s history, following the 1998 Asian financial crisis and the 2009 global financial crisis.

According to Hyundai Motor on the 21st, the labor and management held the 12th wage negotiation session via video conference at three locations, including the Ulsan plant headquarters, and produced this tentative agreement. Along with the wage freeze, the agreement includes a performance bonus of 150%, a COVID-19 crisis recovery incentive of 1.2 million KRW, 10 shares of employee stock ownership, and 200,000 KRW in traditional market gift certificates to revitalize the local economy.

A Hyundai Motor official explained, “Labor and management fully empathized with the difficult domestic social and economic situation caused by COVID-19 and agreed on the need for joint efforts to overcome the crisis facing the automotive industry due to the global economic downturn.”

This wage freeze is the first for Hyundai Motor in 11 years since 2009. Considering the crisis situation caused by COVID-19, Hyundai Motor’s labor and management minimized the negotiation period and achieved a tentative agreement without disputes for two consecutive years.

Previously, the Hyundai Motor labor union submitted a demand to management that included a base salary increase of 120,304 KRW per month (excluding seniority increments) and a performance bonus payment of 30% of net profit. In response, management proposed in the 11th main negotiation held on the 17th that the base salary be frozen and a performance bonus of 130% of the monthly ordinary wage plus 500,000 KRW be paid, but the union rejected this. Subsequently, in the additional main negotiation held on this day, a tentative agreement was reached by increasing the performance bonus and incentive while freezing the wage.

Accordingly, the 2020 Hyundai Motor labor-management wage and collective bargaining agreement appears to have passed the critical stage before Chuseok. However, variables remain. This tentative agreement must pass a ratification vote by union members to become final. The union plans to hold explanatory meetings for delegates and members on the 22nd and conduct the ratification vote on the 25th.

Meanwhile, labor and management also adopted a “Social Declaration for Joint Labor-Management Development and Labor-Management Relations Change” in this tentative agreement. The declaration includes ▲ securing future competitiveness of domestic plants and employment stability for current employees ▲ responding to changes in the future automotive industry such as the expansion of electric vehicles ▲ operating job transition programs in preparation for future industrial changes ▲ realizing labor-management relations together with customers and the public ▲ supporting mutual growth with parts suppliers to overcome the automotive industry crisis ▲ and striving jointly for survival and coexistence in the automotive industry through quality improvement and customer satisfaction.

Through this social declaration, labor and management agreed to expand the “Mutual Cooperation Program” at the group level to support parts suppliers struggling due to the prolonged COVID-19 pandemic. In a separate agreement, they plan to participate in the 50 billion KRW regional parts supplier employment maintenance special support fund project promoted by Ulsan City and Ulsan Buk-gu Office and discuss detailed support measures.

Additionally, to ensure vehicle quality, they will establish quality councils for each production plant, strengthen joint labor-management quality improvement activities at the new car stage, and promote quality improvement investments totaling 200 billion KRW by 2025.