Labor unions can save our car industry

“Made-in-Korea” automobile production that had been stagnant for years decreased by 6.4 percent in the first half of this year despite a brief rise in domestic demand because exports are sluggish and carmakers increasingly produce automobiles abroad. As a result of decreases in domestic demand, export and production, employment in automobile manufacture ring decreased by 6,000 jobs compared to 2010.

The decline of the Korean automobile industry is caused by the relative weakening of Korea’s production competitiveness compared to foreign carmakers, and fundamentally, the labor-management relationship that lead to high cost and low productivity in domestic production.

Leading automobile industries in the United States, Germany, France and Japan have turned the labor-management relations into a collaborative paradigm to secure competitive dominance and continue employment. Labor relations at Toyota, Volkswagen, GM and Renault Group, which are already ahead of Hyundai-Kia, have changed.

Lately, automobile industries in Spain and Italy made recoveries. Australia’s automobile industry has lost competitiveness due to confrontational labor relations, and all global companies pulled out their factories from Australia, resulting in losses of 200,000 jobs.

Unfortunately, Korea is the only country that maintains labor relations of conflicts and confrontations among major automobile producers.

As a result, wages in Korean companies go up by 5 percent every year while rival companies in other countries had about 2 percent wage increase in the past three years.

Korea’s wage level in the automobile industry is the highest in the world, while productivity is one of the lowest as the wage levels are unrelated to productivity. The labor and management of the automobile industry need to establish a cooperative partnership toward the joint priority goal to strengthen global competitiveness and make the Korean automobile industry internationally competitive.

Maintaining a reasonable wage level and improving labor productivity to secure competitiveness will be the only way to produce more cars in Korea and maintain and expand good jobs. Koreans hope for the voluntary, patriotic determination of the labor unions that have more authority and power than unions in any other country.