Hyundai Motor's starting pay as high as 90 million won in record deal with union

Industry

Published: 16 Jul. 2024, 07:00

Hyundai Motor's starting pay as high as 90 million won in record deal with union

Hyundai Motor President and co-CEO Lee Dong-seock, right, and labor union head Moon Yong-moon shake hands at the signing ceremony for the improved compensation package at the company’s Ulsan plant on Monday. [HYUNDAI MOTOR]

Hyundai Motor and its labor union agreed to a 4.65 percent wage increase for this year, the largest raise recorded for the carmaker yet, effectively bumping up the total maximum yearly compensation for new recruits to 90 million won ($65,000).

While Hyundai Motor’s sister company, Kia, is expected to strike a pay deal of a similar size, other mid-sized auto companies are a far way off in their negotiations.

Hyundai Motor’s labor union collectively bargained for the workers’ improved package, and held a signing ceremony for the deal in Ulsan on Monday. This marks the sixth consecutive year the union and management reached an agreement without a strike, setting a new record for the longest period without walkouts since the union was founded in 1987.

The deal was approved on Sunday, after the majority of unionized members voted in favor of the resolution. Of the 43,285 unionized workers, 84.53 percent participated and 21,563 voted in favor of the provisional agreement.

This year’s agreement includes a 4.65 percent wage increase, or 112,000 won a month, including step increments, as well as performance bonuses, quality improvement incentives and 25 Hyundai shares.

The average annual compensation for a Hyundai Motor employee in 2023 was 117 million won. The company’s labor union said the recent deal was expected to raise each unionized worker’s annual pay by an average of 50.12 million won. The company’s management, however, said the increase would be lower.

“The average annual wage increase for each worker is estimated at an amount in the 10 million won range,” a Hyundai insider told the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily.

Hyundai Motor's unionized workers vote on the partial agreement for compensation packages. [HYUNDAI MOTOR LABOR UNION]

With the wage deal, new Hyundai Motor recruits will have some of the highest starting salaries in Korea. The automobile manufacturer gives performance-related bonuses to new employees even if they had not contributed to the previous year’s results.

Though the final amount will vary by role, employment conditions and duration of employment, this year’s pay before tax for a college graduate who joined Hyundai Motor in January this year can reach up to 94 million won. The basic pay for a new recruit starts in the mid-50 million won range, and bonuses can reach up to 40 million won.

“Hyundai Motor’s starting salary this year is one of the largest among major companies,” a financial industry insider said.

Auto parts manufacturer Hyundai Mobis and its labor union also reached an agreement, approved on Friday, that will see a 112,000 won monthly increase in basic pay, including step increments, as well as bumps in bonuses and incentives.

The raise is at a similar rate to Hyundai Motor’s. Kia, meanwhile, is still at the bargaining table, but is expected by industry insiders to reach a deal with its union that is similar to that of Hyundai's.

Average annual compensation paid to workers at domestic automobile manufacturers in 2023 [LEE JEONG-MIN]

Wage negotiations at mid-sized automobile manufacturers, on the other hand, aren’t going so smoothly.

The GM Korea branch of the Korean Metal Workers’ Union (KMWU) has been staging a partial strike, working around four to six hours a day, from July 8. According to insiders from the auto industry, GM Korea’s labor union asked for a 159,800 won monthly increase in basic pay this year, excluding step increments, as well as performance bonuses equal to 15 percent of the previous year’s net profits and additional incentive pay at a 300 percent rate of ordinary wages.

GM Korea’s union is reportedly at odds with management over its proposal of a 79,000 won wage increase, including step increments, a lump-sum payment for settlement worth 3.5 million won and management bonuses amounting to 7 million won.

Renault Korea’s management and unionized workers also clashed on the increase rate for basic pay, the peak wage system — a system introduced in 2009 that gradually reduces the wages of senior workers several years before retirement — and on amendments to the bonuses system during their first round of negotiations on Thursday.

KG Mobility started negotiations on July 3, with its union asking for a 143,000 won increase in basic wages, an extension of the retirement age to 63, and the introduction of a pension system.

Fears of strikes spreading in Korea are growing among management. The KMWU kicked off its general strike on Wednesday while demanding that the government amend the Trade Union and Labor Relations Adjustment Act.

Employees unionized under the KMWU who worked at businesses that supply parts to Hyundai Motor Group subsidiaries joined the strike for four hours. Industry insiders estimate the partial strike to have affected the production for around 2,500 cars made at Hyundai and Kia plants. A Hyundai Motor Group insider, however, said the “disruption in production can be redeemed through work outside of official hours.”

Workers unionized under the National Samsung Electronics Union stage a protest in front of Samsung Electronics' offices in Hwaseong, Gyeonggi. [YONHAP]

The National Samsung Electronics Union (NSEU), whose 31,000 members amount to around 26 percent of the company's workforce, extended their strike indefinitely from July 8 over an extra day of annual leave, an increase in basic wages at a rate of 3.5 percent, compensation for economic losses resulting from the strike and an improvement to the bonus payment system. The union looks to disrupt production for legacy chips and high-bandwidth memory (HBM) chips by inviting workers in those production lines to join in the strike.

“Unlike Hyundai Motor’s labor union, which has equal power to management, Samsung Electronics’ union hasn’t found its footing; this has led to the union sending a more aggressive message to management,” an activist group member said. Samsung Electronics chairman Lee Jae-yong did not comment on the NSEU’s general strike after arriving in Korea on Sunday.

Some in the industry worry that the labor unions’ strikes at the large companies will generate hostility from the public.

“The economic recession and increase in the minimum wage have made it very difficult for the self-employed and small to mid-sized businesses,” a source from a major conglomerate said.

“Collective bargaining is the right of laborers, but labor unions at large companies, who are making demands for themselves and not over restructuring or unfair wage cuts, may be met with animosity from the company’s shareholders and the public.”

BY KO SUK-HYUN [kim.juyeon2@joongang.co.kr]