When unions spin out of control

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When unions spin out of control

Every year, the Hyundai Motor union goes on a strike, and on Wednesday, it once again voted for a walkout. The group will negotiate with management, but if its demands are not accepted, it could go on with the strike at any time.

Anyone would doubt the union’s judgment if he or she looked at its demands. The union wants a 7.8 percent wage increase and 30 percent of quarterly net profit as a bonus. The retirement age would be extended to 65, and a peak wage system would not be adopted. Its demand also includes a provision that management and the union must agree on domestic production volume.

Hanyang University Prof. Sunwoo Myoung-ho points out that its demand for a wage increase is excessive, given the company’s current situation, and for a union to get involved in deciding production volume infringes on management rights.

The union must reflect on whether it is qualified to go on strike. According to the Korea Automobile Manufacturers Association, the average salary of Korean carmakers per person is 923.4 million won ($77,911), the highest in the world. That’s higher than Volkswagen’s 906.2 million won and Toyota’s 835.1 million won. However, its productivity is considerably lower. Production per person in Korea amounts to 37 cars per year, compared to 57 cars by Volkswagen and 93 by Toyota.

It’s not like the company is doing well, either. Last year, Hyundai Motor saw its worst performance in four years. This year, it’s even worse. In the first half, Hyundai Motor suffered a 3.2 percent decline in sales and a 17 percent reduction in operating profits. Domestic market share is lower than 40 percent this year. And the stock price, which once peaked at 270,000 won, dropped to 156,500 won as of Thursday - the same level as five years ago. That’s why the demands of the union sound so ridiculous.

Hyundai Motor needs to take a look around. The unions and managers at GM Korea, Renault Samsung and Ssangyong Motors have already completed wage negotiations. Hyundai and Kia Motors are the only companies gearing up for a strike. The managers and unions of foreign carmakers also collaborate and compromise to get through industry crises. Volkswagen, the global leader in the first half of the year, has waded through two previous crises - one in the 1990s and the other in the 2000s - and management and the union agreed to cut labor costs with reduced work hours and flexible shifts. Toyota pays wages according to productivity and working hours, and GM agreed on an intense restructuring.

Hyundai Motor, the biggest single work site in Korea, with 46,000 union members, and other unions are closely watching its negotiation process. Wage negotiations at Hyundai Motor are considered the barometer of the labor-management relationship in Korea.

Daelim University Prof. Kim Pill-soo argues that it’s doubtful whether the Hyundai Motor union feels a sense of crisis, and if the company is in crisis, the union is responsible in large part. The Hyundai Motor union needs to shake off its label as “an archetype of a militant union.”

The author is a business news reporter
for the JoongAng Ilbo.

JoongAng Ilbo, Sept. 11, Page 29


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