Strike pressure eases in autos, shifts to steel and shipbuilding

Wage battles are winding down at Korea’s automakers, but labor unrest is shifting to steel and shipbuilding as unions step up strike pressure.

Hyundai Motor’s labor union members are set to vote Monday on a tentative wage agreement that would settle this year’s wage talks if approved. The agreement came after a prolonged dispute that included the union’s first full-scale strike in a decade.

Kia’s union, which approved a tentative agreement in a membership vote Friday, signed the wage and collective bargaining deal with management Monday at Kia Autoland Gwangmyeong.

Renault Korea approved a tentative wage and collective bargaining agreement last Wednesday, while GM Korea and KG Mobility wrapped up their negotiations last month.

Even after wage negotiations are settled, automakers still face losses accumulated during the strikes and deteriorating profitability across the industry.

The industry estimates that strikes at Hyundai Motor disrupted production of 55,200 vehicles, resulting in 2.3 trillion won ($1.68 billion) in lost sales. Hyundai Motor is also under pressure to improve its performance after operating profit fell 25.8 percent on year in the first half.

Korea’s steel and shipbuilding industries are bracing for labor unrest as automakers move closer to settling their wage disputes.

Steelmaker Posco’s labor union has set Sept. 9 as the deadline for reaching a wage agreement and warned that it could stage the company’s first strike since its founding in 1968. The union secured the legal right to strike after the National Labor Relations Commission ended mediation on Aug. 18 without an agreement.

The Posco union has demanded a 7.1 percent increase in monthly base pay, an incentive payment equivalent to 600 percent of base pay, 50 shares of company stock and holiday bonuses equivalent to 200 percent of base pay.

“The negotiations are an effort to address chronic staffing shortages, long working hours and safety and welfare issues, while seeking proper recognition and compensation for the sacrifices made by workers on the ground,” the union said.

Management, however, has balked at the demands as the steel industry struggles with a prolonged downturn and high U.S. tariffs. Posco’s operating profit fell 43.3 percent on year to 487 billion won in the first half.

HD Hyundai Heavy Industries’ labor union plans to begin a seven-hour partial strike involving union officials and delegates starting Wednesday. Their labor action is expected to be followed by a series of partial strikes by different divisions through Sept. 15.

The union is demanding a monthly base-pay increase of 149,600 won, separate from regular seniority-based raises, a 100 percent increase in bonuses and profit-sharing equivalent to at least 30 percent of operating profit.

Management has yet to present its wage proposal for this year, and the union appears to be turning to strikes to increase pressure and strengthen its position at the bargaining table.

Management and the union remain divided over major issues, particularly the demand to share 30 percent of operating profit with workers, according to industry sources. Shipyards can continue operating when only some workers go on strike, unlike auto plants. But a broader strike would inevitably disrupt production.

“Large performance bonuses in the semiconductor industry have raised expectations for performance-based compensation across the broader industrial sector,” said Lee Young-myon, professor emeritus of business administration at Dongguk University. “But companies and industries vary widely in their performance and business circumstances, so it is difficult to raise compensation standards across the board.”

Prof. Lee also stressed the importance of labor and management sharing an understanding of the industry’s challenges.

“Given the high degree of uncertainty in the global business environment, it is also important to preserve resources for future investment and to withstand potential crises rather than focusing solely on distributing short-term gains,” Lee said. “Labor and management in the auto industry were able to wrap up wage negotiations after reaching a shared understanding of worsening industry conditions. The steel and shipbuilding sectors should also seek solutions that take such uncertainties into account.”

BY KO SUK-HYUN [[email protected]]