Hyundai Motor and Kia Firmly Announce "No Year-Beginning Bonuses"... Union Signals Strike, Vows "Will Fight"

Use "Performance bonuses, controversy intensifies... Will change compensation method"
Labor "Denying union members' efforts... Will punish severely"

Hyundai Motor and Kia management have decided not to give performance bonuses at the beginning of the year. In the past, at the beginning of 2022 and last year, the companies distributed several million won to all employees uniformly as special performance bonuses or encouragement payments due to good management results in the previous year. The labor union opposed this, stating they would "mobilize all legal means to severely retaliate."

In a letter sent to the union on the 23rd, the CEOs of Hyundai Motor and Kia stated, "Looking at what happened after the payment of performance bonuses over the past two years, both internal and external issues and controversies surrounding the company have intensified," adding that "the original purpose of performance bonuses as 'rewards for meaningful achievements' has been diminished."

They continued, "Internally, although performance bonuses are clearly rewards based on the previous year's results, confusion arose during negotiations as they were considered separate from the total annual compensation. There were controversies within each group company, and broadly speaking, considering the worsening economic downturn affecting the entire domestic industry, negative misunderstandings related to special performance bonuses at the beginning of the year could not be overlooked."

A red light is on at the traffic signal in front of the Hyundai-Kia Motors headquarters in Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

The two companies determine the wage increase rate through labor-management wage and collective bargaining negotiations held around summer, and also decide on performance bonuses. At the beginning of 2022 and last year, separately from this, they distributed approximately 4 million won, and about 6 million won including some stocks, respectively, as special performance bonuses. Unlike other companies, the same amount was uniformly paid to all employees, including contract workers.

There was no fixed payment standard agreed upon between labor and management; it was given at the discretion of management. They judged that this method was inefficient. Last year, it was reported that some shareholders expressed regret over the payment of performance bonuses at the regular shareholders' meeting.

Both companies recorded their highest-ever management performance last year. Accordingly, demands for special performance bonuses at the beginning of the year were strong both inside and outside the union. The union officially requested special performance bonuses. Proposals ranging from several million won to about 10 million won were also discussed among employees.

At last year's 'Joint Declaration Ceremony for Creating a Safety-First Culture,' labor and management representatives Ahn Hyun-ho, former Hyundai Motor Union Branch Chief, and Lee Dong-seok, CEO, are shaking hands.
[Photo by Hyundai Motor] [Image source=Yonhap News]

The companies conveyed on the same day that since the process of distributing bonuses in two installments caused disputes, they would pay according to labor-management consultations. Hyundai Motor's management stated, "Rather than exacerbating controversies through the special performance bonus payment method, we intend to change the compensation method so that performance bonuses can be paid earlier," adding, "We hope that through changes in this year's negotiation patterns, performance reward plans will be promptly discussed and consensus reached so that labor and management can work together to resolve the dissatisfaction of frontline employees."

The union reacted strongly to the rejection of the performance bonus payment request. Moon Yong-moon, head of Hyundai Motor's branch, said in an emergency statement after receiving the letter, "This is a provocation that completely denies the sweat and blood of 43,000 union members," and "We will mercilessly crush this provocation through struggle."

He emphasized, "Keep in mind that the smooth progress of the company's 2024 production plan entirely depends on management." The union's stance indicates they are willing to strike if performance bonuses are not paid.

Hyundai Motor Company building in Yangjae-dong, Seoul. Photo by Jinhyung Kang aymsdream@