SEOUL: Hyundai Motor Co’s unionised workers in South Korea vote on Friday to decide whether to go on a strike for the first time in four years over demands for higher wages and anger the management was prioritising overseas investment.
If the union, one of the biggest in the country with 46,000 members, votes to strike, other industries could follow suit, threatening to slow its manufacturing-reliant economy, which saw exports grew at their slowest pace in more than 1-1/2 years last month.
The union is seeking a minimum basic monthly pay increase of 165,200 won ($127) and a performance pay equating to 30 per cent of Hyundai’s 2022 net profit, as soaring inflation cuts into workers’ wages. It is also demanding Hyundai invest in the country to support new businesses including urban air mobility, purpose-built vehicles and electric vehicle-related auto parts manufacturing.
“Inflation has been speeding up even after we came up with our demand, so many of us feel that our wages need to keep up with this soaring inflation,” a union member at Hyundai Motor told Reuters on condition of anonymity.
Negotiations between Hyundai’s union and management, which started in May, stalled last month. The vote-counting is expected to begin after 5:30 pm (0830 GMT).
The union’s demands come after Hyundai Motor Group announced more than $10 billion investment plans in the United States by 2025 including $5.5 billion EV and battery facilities in Georgia.
The auto group said in May it would also invest 21 trillion won ($16 billion) through 2030 to expand its EV business in South Korea.
Analysts say as the union’s new leader has adopted an aggressive negotiating stance, the chances of Hyundai facing a partial strike this year could be more likely than last year, putting at risk its revenue growth just as a chips shortage used in cars is expected to ease in coming months.
“If the union decides to go on strike, Hyundai would face inevitable production output loss, when they need to ramp up production to meet strong car demand,” said Cho Soo-hong, an analyst at NH Investment & Securities.
A major industrial action in June had already dealt a blow to the economy when unionised truckers went on a nationwide strike for more than a week to protest soaring fuel costs, crippling ports and industrial hubs.
South Korea’s annual inflation accelerated to 5.4 per cent in May, the fastest in nearly 14 years, adding to the risk of weaker domestic demand in Asia’s fourth-largest economy.
Shares of Hyundai Motor closed down 0.3 per cent, versus the benchmark KOSPI’s 1.2 per cent fall.