Hyundai Motor Faces Potential Strike Amid Wage Negotiations

Hyundai Motor's labor and management are once again heading toward a standoff. The Hyundai Motor Union has initiated steps toward a strike, demanding that 30% of last year's net profit be distributed as performance bonuses during this year's wage and collective bargaining negotiations. An overwhelming 86% of union members voted in favor of the strike, and the Central Labor Relations Commission decided to suspend mediation on June 25. The union plans to launch a central countermeasure committee on June 30 to decide on the strike's feasibility.

However, the door to negotiations is not completely shut. If the company presents a new proposal that the union accepts, a strike could be avoided. Yet, given the current atmosphere surrounding labor negotiations, tensions are higher than ever. The union's demands are seen as excessive. The proposed 30% of net profit for performance bonuses amounts to over 3 trillion won based on last year's figures. This demand is closer to a call for a fundamental change in the profit-sharing structure rather than a simple wage increase.

There is no reason to deny workers their rightful compensation. It is undeniable that workers have significantly contributed to Hyundai's rise as a global automotive leader. The issue lies in Hyundai's performance. While the company is experiencing record sales, its profitability is rapidly declining. Operating profit in the first quarter of this year dropped by more than 30% compared to the same period last year, impacted by high tariffs in the U.S., rising raw material costs, a slowdown in the electric vehicle market, and logistical uncertainties due to conflicts in the Middle East.

The automotive industry is undergoing a significant transformation not seen in a century. Astronomical investments are required in electric vehicles, software-defined vehicles (SDVs), autonomous driving, robotics, and artificial intelligence (AI). This is why Hyundai Motor Group is aggressively investing in U.S. factories, battery production facilities, and future mobility projects. The question of whether to distribute most of the profits as performance bonuses or to invest for future competitiveness cannot simply be categorized as a labor-management issue; it is a matter of corporate survival and national industrial competitiveness.

Particularly concerning is the recent trend of applying the 'performance bonus N% formula' across various industries. SK Hynix has been distributing a portion of its operating profit as excess profit-sharing, and Samsung Electronics' labor and management recently reached a tentative agreement on a new performance bonus system linked to semiconductor business performance.

Applying this formula mechanically across all industries is risky. The semiconductor industry is currently enjoying an unprecedented boom driven by the AI era. In contrast, the automotive industry is facing a triple threat from U.S. tariffs, aggressive competition from Chinese firms, and the race toward electrification. It is unreasonable to apply the same standards to industries with vastly different circumstances. If the practice of distributing a certain percentage of net or operating profit as performance bonuses becomes established, companies may find themselves in a position where they prioritize building up bonus funds over investing during prosperous times.

A parable from Zhuangzi tells of a hunter who aimed at a magpie but hesitated as it seemed uninterested. Upon closer inspection, he realized the magpie was focused on a nearby grasshopper, which was in turn eyeing a cicada hanging on a tree. This story illustrates the folly of being fixated on immediate gains at the expense of loyalty, leading to loss—a concept known as 'seeing profit and forgetting righteousness' (견리망의).

To maintain competitiveness amid the massive changes in the global automotive market, investment and innovation must be prioritized. Competitors from the U.S., China, and Japan are racing to secure their positions in the future vehicle market. No one wishes to see Hyundai, a representative of Korean manufacturing, come to a standstill due to performance bonus disputes. If a strike materializes, the repercussions will extend beyond the company and union, affecting suppliers, local economies, and national export competitiveness. It is hoped that Hyundai's labor and management can reach a rational agreement that preserves the competitiveness they have built together and ensures sustainable growth.

* This article has been translated by AI.

Copyright ⓒ Aju Press All rights reserved.