Hyundai Motor reaches wage deal

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Hyundai Motor reaches wage deal

Hyundai Motor reached tentative agreement with its union late Wednesday, signalling an end to nearly three months of on and off negotiations and a series of strikes.

The union has called for 14 full-fledged or partial walkouts since July, causing a reported production loss of 1.5 trillion won ($1.3 billion). Both sides agreed that prolonging negotiations would hurt the company, the local economy and partner companies such as suppliers.

At the 21st negotiation session, held Wednesday at Hyundai Motor’s Ulsan plant, Hyundai Motor agreed to raise workers’ monthly wage by 58,000 won. Also, it pledged to pay 3.3 million won as a one-time incentive as well as a bonus of 350 percent of a monthly wage.

Workers will also be given 200,000 won worth of gift certificates which can be used in traditional markets and 10 Hyundai Motor shares. Originally, the union had asked for the monthly wage to be hiked by 152,050 won.

The 47,000-member union will vote on the plan today.

Last year, negotiations resulted in a monthly wage raise of 85,000 won, a 400 percent of monthly wage bonus and a 4.2 million one-time bonus, including traditional market gift certificates. Twenty shares of Hyundai Motor were given each to worker as well.

Hyundai Motor said the smaller raise reflected sluggish performance by the company.

In 2015, Hyundai Motor posted its lowest operating profit since 2010, 6.4 trillion won, which marked a steep 15.8 percent on-year drop. The operating profit for the first half of this year was not high, either: 3.1 trillion won, a 7 percent on-year dip. With an unstable global economic situation, there is uncertainty for the second half.

“There has been a shift in the wage negotiation paradigm,” said Hyundai Motor through a statement. “Once focused on wages, it has shifted to employee welfare and services.”

The automaker said it has expanded support for an individual pension system as well as improving the quality of work uniforms and meals provided at the plant. However, no solution was found on the issue of instituting a peak wage system proposed by the company. The peak wage system reduces workers’ salaries as they approach retirement age to allow companies to hire more entry-level workers.

Currently, Hyundai Motor freezes the wage of a worker at 59 and cuts the wage 10 percent at age 60, which is the retirement age.

The company has been proposing to expand the 10-percent wage cut to 59-year-old workers, which has been refused by the union.

“It was either we choose to raise the base wage by a greater amount or protect the current peak wage system,” said a spokesperson for Hyundai Motor’s labor union.

“We came to the conclusion to maintain the current peak wage system in return for a smaller raise.”

Hyundai Motor pledged to cooperate with the union to “normalize the production line from now on,” according to the spokesperson.

Hyundai Motor shares rose by 0.74 percent on Thursday to 136,500 won per share.

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