Hyundai Strike Becoming Annual Ritual

On July 23, a Hyundai Motors executive sighed and said, “In the Hyundai Motors calendar there are only 11 months in a year. With strikes becoming a regular occurrence, production comes to a halt for one entire month. The same thing happened this year.”

Since its launch in 1987, Hyundai Motors’ labor union has held strikes for 19 years excluding 1994. The number of cumulative strike days, counting only workdays, amounts to 325 days. It converts into an average of waging strikes during 17 workdays. If one includes holidays, the union has spent annually about three weeks on strike. This year, it started a strike on June 26 and has almost completed an entire month with 25 days on strike.

There are reports that early in the year, Hyundai Motors’ management establishes its annual business plans assuming the presence of strikes. That is the secret of the company always achieving its annually production goals despite the halting of production due to strikes. Seen in another aspect, it also means that if it weren’t for the annual strikes the company could produce more cars. The start of a strike, and the tug of war between the union and management in the process of reaching an agreement, is almost a predictable path.

Hyundai Motors Rules of Striking—

The union and management generally start engaging each other sometime in April or May.

The union first proposes around a 10 percent raise of salary, which will be difficult for the management to accept. In response, management offers about half of that figure, or a three to five percent raise. This year, the union demanded a 9.1 percent raise in their base salary, while management proposed a 4.4 percent raise. Afterwards, during the early stages, Hyundai Motors union declares that the negotiations are off and usually starts its strike in late June or early July.

A union member said, “Every year around June, it comes to my mind, ‘When will the strike start?’”

With the strike in progress, management emphasizes losses caused by the standstill in the production lines and suspension of exports. On its part, the union criticizes that the losses reported by the management are numbers to pressure the union.

Regarding Hyundai Motors claim that this year’s strike cost over one trillion won in losses, a labor union official argued, “They have predicted losses caused by the strike and are prepared for it, yet they exaggerate it.”

Both Hyundai Motors’ union and management do not make concessions in their negotiations, even after the strike starts, and unless there are particular factors such as labor union issues, generally the situation turns around all of the sudden right before summer leave and both parties reach an agreement.

That is because if the strike prolongs to the summer leave period, the discontent of members boils because they will not receive leave bonuses and they also become tired of the long strike. This year, with the summer leave season starting on July 31, the labor-management negotiation is about to reach an agreement.

Outlined Strike and Increasing Losses—

There are analyses that the unreasonable strikes waged by Hyundai Motors’ union and the management’s stubbornness comes from a “loose anxiety” that emanates from Hyundai and Kia Motors oligopoly of the Korean domestic automobile market where they hold a 75 percent share. Furthermore, another reason for the regular strikes is that Hyundai Motors union is one of the core members of the Korea Confederation of Trade Unions (KCTU), making their strike a proxy battle between management and all the other unions.

An official of Hyundai Motors’ union commented, “If Hyundai Motors’ union does not strike and reaches a compromise without difficulties, it might yield negative effects to unions in other companies, which are under difficult conditions.”

The greatest victims in the regular Hyundai Motors strikes are its suppliers, which number in the thousands.

According to the Korea Auto Industries Cooperative Association (KAICA), about 377 Hyundai Motors primary suppliers suffered losses amounting to nearly 600 billion won.

Hyundai KIA Motors Cooperation Association President Lee Yeong-seop said, “Only a few suppliers large enough can withstand the strike, while the other smaller companies are helpless in the face of the strike and suffer all the losses.”

Some consumers also expressed their concerns, saying, “If the production lines are suddenly activated after the strike ends and automobiles produced hastily, won’t there be any problems at all with quality?”

The anxiety of foreign investors will grow and Korea’s international credit will also inevitably fall.

A member of the Ulsan Corporation Loving Citizens Association recommended, “Both the union and management should not repeat annual strikes and agreements that follow the same steps, but rather propose mutually acceptable demands from the beginning and manage the company free of strikes.”

Hyo-Lim Son Dong-Bin Seok aryssong@donga.com mobidic@donga.com