Hyundai Motor rushes review of wage system

The nation’s leading automaker, Hyundai Motor, is speeding up changes to its wage system.

Last October, the company formed a committee to devise a new wage system by the end of March. Committee members traveled to France and Germany from Jan. 6 to 14 to study other automakers’ wage systems.

The company has decided to send the committee members to Japan next month to study Toyota and Nissan. Those companies adopted German companies’ wage systems and Hyundai Motor wants to study how the systems fared at Asian companies.

Since the Seoul Central District Court last week ruled in favor of the company in a lawsuit on the exact definition of base salary, the company doesn’t want to waste time in pushing through major changes to its wage system. In March 2013, 23 unionized workers filed a lawsuit saying that the company should include extra payments including vacation pay in its definition of base pay, but the court only acknowledged arguments from two of those employees. The ruling was considered a victory for the company.

“With the ruling, Hyundai Motor definitely can carry out their plans for wage system reform more positively,” said an industry spokesman.

The company hasn’t yet discussed a new wage system with its labor union, but one core feature is that the company will simplify and consolidate about 100 different extra payment categories.

The union wants the company to include such incentives in its definition of base pay, while the company said extra payments should be on top of base pay and adjusted in accordance with the company’s performance.

The company also says its current step-based salary system leads to overly high wages compared to the production rate.

In Hyundai Motor’s U.S. factory, the average work hours spent to manufacture a car is only 14.6 hours, and the corresponding figure in China is 19.5 hours. But in Korea it takes 31.3 hours, according to the company.

The company said the system should be changed to a performance-based system.

It also wants a new wage system that can accommodate contemporary calls for fewer working hours for Korean workers and an extension of the retirement age.

The company is considering adopting a salary peak system, in which the employer extends the employees’ retirement age but lowers their wages beyond a peak amount as they get older.

But the union is resisting many changes as it insists that several extra payments including vacation bonuses and other employee benefits should be included in the definition of base pay.

Hyundai’s attempt to change its wage system will be watched by other manufacturers. Hyundai Motor has a labor union with about 51,600 members and any reforms it comes up with could be guides for other companies.

Meanwhile, the union said that its decision to appeal to the court ruling will be determined on Wednesday.

BY KWON SANG-SOO [sakwon80@joongang.co.kr]