Hyundai, Kia unions break off wage negotiations

Tensions are rising at Hyundai Motor Group as the world’s fifth-largest automaker faces possible job actions by its labor union.

According to the company, the labor union suspended wage bargaining after the 17th round of negotiations on Tuesday night.

The 45,000-member union yesterday filed a labor dispute adjustment with the National Labor Relations Committee and will have a strike vote on Tuesday.

Hyundai’s small affiliate Kia Motors faces similar circumstances. The nation’s second-largest automaker said its union left the fifth wage bargaining session Tuesday in Gwangmyeong, Gyeonggi, and will also vote on Tuesday on whether to strike.

Hyundai management and the union have been negotiating since May 28. The union has made about 180 proposals, including a 130,498 won ($116.70) raise in monthly base pay and an 800 percent increase in bonuses.

“It’s a pity that the union announced a breakdown in negotiations before trading our opinions on its massive 180 proposals. It really calls into question the union’s sincerity,” the company said in a release. “To finalize negotiations smoothly, in-depth discussion should be continued.”

The union claimed management has had enough time to review its proposals but was disappointed that they were not taken seriously by management representatives at the negotiating table.

Kia’s management and union discussed 20 proposals, including base pay and bonus increases, but couldn’t reach agreement.

This would not the first time the leading automaker and its main affiliate have suffered losses because of a strike by their unions.

The automakers union is one of the most hard-line and influential labor organizations in the country.

Last year, Hyundai said it had suffered 1.7 trillion won in losses after 82,088 vehicles weren’t produced on schedule due to a series of summer strikes.

Kia said it lost 1.03 trillion won as production of 62,890 vehicles was halted.

Earlier this year, production was disrupted when management and the union could not agree on compensation for weekend work.

Damages totaled 1.6 trillion won due to weekend production stoppage from March to May, according to Hyundai.

Three other local automakers have finalized their wage bargaining and are pushing to pump up production.

Although August is usually a slow month, experts forecast that Hyundai and Kia sales will plunge compared to July.

After strikes last year, Hyundai and Kia combined sold 68,028 cars in August, a drop of 32,000 from the previous month.

The stock market responded quickly to the suspension of negotiations. Hyundai Motor dropped 3.23 percent to end at 225,000 won ($201) yesterday on the Kospi, while Kia also slid 3.66 percent to 60,500 won.

Industry insiders hinted the union is not likely to yield soon, with union leadership elections set for September.

BY joo kyung-don [kjoo@joongang.co.kr]