Hyundai strike threat exposes profit-sharing fallout

Hyundai Motor’s union has announced an eight-hour general strike for Friday, its first full-scale strike since collective bargaining in 2016.

Posco, a pillar of Korea’s steel industry, also faces its first general strike since its founding in 1968. The National Labor Relations Commission ended mediation over wage and collective bargaining negotiations on Tuesday, giving the union the legal right to strike. Although labor and management agreed to continue talks, a strike would end Posco’s 58-year strike-free record. The threat comes as the steelmaker struggles with Chinese oversupply and growing protectionism.

At Hyundai, negotiations have been influenced by demands for so-called N-percent bonuses, linking bonuses to a fixed share of corporate profits. The Hyundai union is demanding 30 percent of net profit. The HD Hyundai Heavy Industries union wants 30 percent of operating profit, while Kakao’s union seeks at least 10 percent.

Such demands are spreading across the auto, shipbuilding and information technology platform industries. Posco’s union has not demanded a fixed percentage, but its demands have grown from last year, possibly influenced by semiconductor-sector bonuses.

Management argues that N-percent bonuses cannot be subject to collective bargaining because they do not constitute wages or other working conditions. Profit-linked bonuses also fall outside management decisions affecting working conditions that can become bargaining issues under the revised Trade Union and Labor Relations Adjustment Act. Ministry of Employment and Labor guidelines cover layoffs or personnel transfers following restructuring that cause substantive changes in working conditions. The Supreme Court has also consistently ruled that operating-profit-linked bonuses are not wages.

Yet unions at major companies may be moving toward strikes partly because they expect the labor-friendly administration ultimately to side with them.

The Labor Ministry should therefore clarify through enforcement decrees and regulations that operating-profit-linked bonuses are not subject to collective bargaining. More fundamentally, the National Assembly should revise the "Yellow Envelope" act again to make clear that corporate profit distribution cannot become grounds for labor disputes.

Without clear rules, profit-sharing demands could spread further, aggravating labor-management conflict when major Korean industries already face difficult external conditions.