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Local carmakers plagued with protracted wage dispute

All Headlines 15:33 August 28, 2016

SEOUL, Aug. 28 (Yonhap) -- Local carmakers' business outlook for the year is increasingly dim as they are struggling with a protracted labor dispute and a fall in demand in emerging markets, industry sources said Sunday.

According to the sources, workers at South Korea's leading carmaker Hyundai Motor Co. have voted down a tentative wage-hike agreement, forcing their labor union to renegotiate the thorny issue and marking the first time that the firm's unionized workers, currently totaling some 49,000, have rejected such an annual pay deal, provisionally agreed upon, since 2008.

Earlier this week, the company's management and union leaders struck a deal to raise the monthly base pay of an employee by 58,000 won (US$52). Each worker will also receive 350 percent of the base monthly payment and an additional 3.3 million won in performance incentives.

Hyundai Motor's management and labor union are set to launch a new round of wage negotiations this week, but it is unclear whether differences will be narrowed any time soon, the sources said.

Hyundai Motor said it has suffered a production loss of 65,000 units due to 14 rounds of partial walkouts, while the management and the labor union were engaged in wage negotiations. Its smaller affiliate Kia Motors Corp. also said its production losses are estimated at 39,000 units due to its workers' partial strikes.

Workers at GM Korea Co., the South Korean unit of U.S. automaker General Motors Co., also launched rounds of partial strikes, resulting in an estimated production loss of 9,000 units. Its labor union is demanding a raise in wages and better working conditions.

Renault Samsung Motors Co., the local unit of French automaker Renault S.A., is still engaged in monthlong wage talks with its labor union, with its outcome expected to come out before the Chuseok holiday, one of the largest in South Korea, in mid-September.

Ssangyong Motor Co., the local unit of Indian auto giant Mahindra & Mahindra Ltd., is the only one that has reached a wage deal with its labor union.

Sales of South Korea-based carmakers dropped from a year earlier last month, due mostly to sharp declines in sales of the country's two largest automakers, industry data showed.

Combined global sales of the five automakers came to 645,524 cars in July, down 5.2 percent from the same month last year.

Domestic sales plunged 10.6 percent on-year to 121,144 units, while their combined overseas sales also suffered a 3.8 percent retreat to 524,380.

The sharp decline in domestic sales came mostly from the top two automakers -- Hyundai Motor Co. and Kia Motors Corp. -- whose sales in the local market plunged 20.1 percent and 8.7 percent on-year to 47,879 and 44,007 units, respectively.

The leading automakers attributed the drop to the June 30 termination of a temporary tax cut on new vehicles.

Hyundai, however, also pointed to a sharp drop in output caused by a series of labor strikes last month, which it said led to a 16.6 percent plunge in production.


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