Hyundai Motor's (005380.KS) union will stage a full eight-hour walkout on the 21st, halting all vehicle production lines for the first time in a decade since 2016. The Korean Metal Workers' Union, the umbrella labor group, has called on auto parts makers and Hyundai Motor affiliates under its wing to join a coordinated strike over the two days from the 20th to the 21st. The entire auto industry has been swept into a strike crisis. POSCO Holdings (005490.KS) faces the first strike threat in its history since its founding in 1968. Although POSCO's union said it would not launch a walkout immediately, the gap between labor and management over wage negotiations is so wide that there is little room for reassurance. Donghaeng, a union centered on employees in Samsung Electronics' (005930.KS) finished-products (DX) division, has also announced a large-scale rally on the 21st, demanding 1,000 shares of company stock per member.
This Hyundai Motor strike is worrying in that the fallout from "N% bonus" demands has materialized into a walkout at a major workplace. The union is demanding a "bonus equal to 30% of last year's net profit." Beyond compensation for their labor, they are asking for a fixed share of the company's management results. Yet this ignores the reality that operating profit fell 25.8% year-on-year in the first half of this year and that large-scale investment is needed in future mobility such as autonomous driving. Partial strikes that have continued since last month have already cost Hyundai Motor about 40,000 vehicles in lost production and 1.7 trillion won ($1.2 billion) in lost sales. If the planned strike goes ahead, an additional 22,000 vehicles and 900 billion won in damage is expected. POSCO's union is also demanding incentive pay of 600 percent, effectively a bonus. Operating profit fell 43.3% year-on-year in the first half amid China's oversupply, slowing demand and trade pressure.
Habitual strikes that ignore business realities can only inflict harm on both the company and its workers. Lost production and worsening earnings ultimately return as a boomerang of wage losses and job insecurity. Demands for an "N% bonus" can erode the funds companies set aside for future investment and undermine domestic investment and industrial competitiveness. The government must move quickly to put in place reasonable safeguards, such as requiring shareholder approval for demands that tie bonuses to a fixed percentage of operating profit. Given that some unions say they will make not only bonuses but even investment in semiconductor plants in the Honam region a subject of labor disputes, the scope of labor disputes under the "Yellow Envelope Act" (the revised Trade Union Act) should be clarified to prevent turmoil at industrial sites.
