Kia Union Declares "Overtime Refusal"... Conflict Escalates Over 'Retiree Tea Price Discount'

Labor Union Raises Level of Struggle Through 3rd Strike Countermeasures Committee
Both Sides Hold Sharp Positions... Painful Main Negotiation Expected on 29th

[Asia Economy Reporter Kiho Sung] Kia's labor and management have failed to narrow their differences over the so-called 'Lifetime Employee ID' system, which offers a 30% discount on new cars every two years, and the labor union is increasing pressure by refusing overtime work. Industry insiders express concerns that this year's wage and collective bargaining agreement (Wage and Collective Agreement, WCA) negotiations could potentially be prolonged, as neither side is willing to back down.

According to the automotive industry on the 27th, the Kia labor union held its third strike countermeasure committee meeting the day before. After the union's rejection of the WCA approval vote, the 11th main negotiation was held, but only confirmed the differences in positions between the two sides.

At the meeting, the strike countermeasure committee decided to refuse general overtime work and suspend all negotiations except for new car discussions and safety accidents. They also decided not to participate in any company training except for retirement, technical job training, and union member education. Kia had recently been conducting weekend overtime work to resolve the accumulated backlog of new car deliveries. The union appears to be preparing for prolonged negotiations, scheduling the fourth strike countermeasure committee meeting for the 11th of next month.

Earlier, on the 30th of last month, Kia labor and management reached a tentative agreement on the WCA during the 10th main negotiation. The agreement included a base salary increase of 98,000 KRW (including step increases), a management performance bonus of 200% plus 4 million KRW, a production and sales target achievement incentive of 100%, a special quality brand improvement incentive of 1.5 million KRW, traditional market gift certificates worth 250,000 KRW to revitalize the local economy, and securing funds for allowance increases.

However, union members rejected the agreement in protest against the reduction of the 'Lifetime Employee ID' benefits. Hyundai Motor and Kia operate a 'Lifetime Employee ID' system that allows retirees with more than 25 years of service to purchase vehicles every two years at a 25% and 30% discount, respectively. Through this WCA, Kia labor and management proposed limiting the benefit age to 75 instead of lifetime and reducing the discount rate to 25% of the car price. Instead, they raised the base salary for 60-year-old workers (retirement age) to 95% of the 59-year-old worker's base salary, which was previously 90%, in accordance with the wage peak system.

Initially, the automotive industry expected labor and management to find a compromise after the Chuseok holiday, but at the meeting on the 22nd, both sides reportedly maintained their original positions.

The management side argued at the 11th negotiation, "A system that goes against public sentiment will not be understood by the public," and "The cost of retiree discounts is less than the cost that goes to current employees through the first tentative agreement." They also stated that priority discounts for electric vehicle purchases would be applied to current employees through the Lifetime Employee ID, and retirees' cases would be considered later. However, the union insists, "Current employees and retirees must be treated equally regarding electric vehicle purchases," and refuses to back down.

Industry analysts believe the union's insistence on the discount system is due to the pyramid age distribution structure within the company. As of last year, 18,874 employees aged 50 or older accounted for more than half of Kia's total domestic workforce of 34,014. The average length of service for all employees is 22 years and 2 months. This means that most union members have fewer years left to work than they have already worked, making them particularly sensitive to post-retirement benefits.

Industry insiders foresee that this WCA could potentially cause conflicts between senior and junior union members at Kia. Since the benefits desired by senior union members nearing retirement differ from those wanted by relatively younger union members, there are concerns that younger union members might be disadvantaged.

Therefore, it is expected that finding a breakthrough in the 12th negotiation scheduled at the Sohari plant on the 29th will not be easy.

The union stated, "The field judged that the rejection was due to the inability to accept electric vehicle purchases and retiree vehicle discounts," adding, "If there is a genuine willingness to resolve the negotiations, that effort must be shown to the union members. Otherwise, it will only lead to stronger struggles."