Hyundai Motor Union "Let's Extend Retirement Age to 65"
Management "In the Electric Vehicle Era, We Actually Need to Reduce Workforce"
[Asia Economy Reporters Changhwan Lee, Jehun Yoo] Hyundai Motor Company has encountered unexpected challenges in this year’s wage and collective bargaining negotiations (wage and collective bargaining, or wage negotiations) due to excessive demands from the labor union and unforeseen conflicts between union factions.
Last year, under the special circumstances of COVID-19, labor and management made concessions to reach an early agreement on wage negotiations. However, this year, amid the recovery phase from COVID-19, the union has presented a series of demands all at once, including extending the retirement age, withdrawing investment plans in the United States, and directly producing batteries for electric vehicles.
Concerns about interference in management rights have arisen over some of the demands proposed by the Hyundai Motor union, and the situation has even escalated into conflicts between union factions.
Union Demands Retirement Age Extension to 65, Management Shows Reluctance
According to the automotive industry on the 24th, Hyundai Motor’s labor and management have held about ten rounds of wage negotiations over the past month since the end of last month, but significant differences in views remain on key issues.
One major point of conflict is the extension of the retirement age. The union strongly demands that the company extend the retirement age, arguing that there is a gap period without income between retirement and the time of receiving the national pension.
The union insists that the current retirement age of 60 should be extended to 65, which is the national pension eligibility age. They argue that most advanced countries such as Japan, Germany, Spain, France, and Italy have legislated a retirement age of 65 or older, and South Korea should follow the examples of these developed countries.
In response, the company has reportedly taken a stance that it is practically impossible. With factory automation accelerating and the shift to electric vehicles, the company needs to reduce manpower rather than extend employees’ retirement age, as doing so would increase labor costs and burden company management, as well as cause problems with new hiring.
As the management showed a negative stance, the union is pushing for legislation. The Hyundai Motor union, along with other completed vehicle unions such as Kia and Korea GM, is currently conducting a petition to the National Assembly demanding amendments to Chapter 4 of the “Act on Prohibition of Age Discrimination in Employment and Promotion of Employment for Older Persons” (the Older Workers Employment Act). The petition’s main point is that the government should revise the law to extend the retirement age.
However, contrary to the union’s claims, opposition to extending the retirement age is emerging mainly among younger employees, intensifying conflicts between union factions.
One petitioner, who introduced themselves as an MZ generation (Millennial + Generation Z) field worker at one of the three major automakers, recently posted on the Blue House National Petition site, criticizing, “At a turning point toward eco-friendly vehicles, talent capable of adapting to change is needed, but the union is not changing and is calling for the extension of the baby boomer generation’s retirement age under the pretext of being skilled workers to preserve themselves.” Currently, more than 3,000 people have agreed with this petition.
Union Demands Withdrawal of 8 Trillion Won U.S. Investment
Last month, the Hyundai Motor union sparked controversy by demanding the withdrawal of the company’s large-scale investment in the United States. This was in response to Hyundai Motor’s announcement on the 13th of last month that it would invest approximately 8.4 trillion won in the U.S.
The Hyundai Motor union immediately opposed this, arguing that future vehicle investments should focus on domestic factories rather than overseas, and demanded the withdrawal of the investment. The union claimed that strengthening the competitiveness of domestic factories and concentrating investment in new industries driven by the 4th Industrial Revolution at domestic plants is the way to survive, and that overseas factories are sufficient at their current level.
In response, management explained that overseas factory investments are separate from domestic factory investments and are beneficial to the company in the mid-to-long term by expanding local market share and reducing costs. The Hyundai Motor union is also demanding the reinstatement of dismissed workers, pardoning disciplined employees, and regular explanations on the progress of future new industry initiatives.
The fundamental reason the union has presented excessive demands despite recognizing them as “overreaching” is employment insecurity. While life expectancy is increasing, jobs are rapidly decreasing due to the 4th Industrial Revolution, which could shake the status of existing union members.
There is also a sense of crisis stemming from the reduction of existing jobs in the electric vehicle era. The Korea Institute for Industrial Economics and Trade has forecasted that when the production share of electric vehicles increases by about 10%, approximately 4,700 jobs in the automotive parts industry could be lost.
Within the industry, the general opinion is that the union’s excessive demands, which are almost tantamount to management overreach, do more harm than good in terms of industrial competitiveness.
Professor Junmo Yang of Yonsei University’s Department of Economics pointed out, “Existing automakers inevitably respond more slowly to industrial transformation than specialized companies like Tesla. In this context, excessive union interference in management and political involvement could cause the loss of competitiveness in the global value chain (GVC), resulting in a ‘self-inflicted’ outcome.”
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