Hyundai Motor unionized workers in South Korea plan strike

Hyundai Motor unionized workers in South Korea plan strike

SEOUL Reuters -- Hyundai Motor unionized workers in South Korea voted for a possible strike for the first time in four years over demands for higher wages and anger that management was prioritizing overseas investment.

The union, one of the biggest in the country, with more than 46,000 members, said on Friday that 81.63% of its voting union members have approved strike action unless the company accepts their demands.

If the union strikes, other industries could follow suit, threatening to slow South Korea's manufacturing-dependent economy, which saw exports grow at their slowest pace in more than one and a half years.

The union wants a minimum basic monthly pay increase of 165,200 won $127 and performance pay that is equivalent to 30% of Hyundai's net profit in the year 2022, due to soaring inflation cuts into workers' wages.

It is asking Hyundai to invest in the country to support new businesses, including urban air mobility, purpose-built vehicles and electric-vehicle related auto parts manufacturing.

One union member at Hyundai Motor told Reuters that inflation has gone up even after we came up with our demand, so many of us feel that our wages need to keep pace with this soaring inflation.

Negotiations between Hyundai's union and management started in May, but ended up stalled last month.

The union's demands come after Hyundai Motor Group, which is Hyundai Motor and Kia, 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 invest 21 trillion won $16 billion through 2030 to expand its EV business in South Korea.

In March, Hyundai Motor stated that it wanted to achieve a 7% market share in the global EV market by 2030, with an annual sales target of 1.87 million vehicles.

Analysts say that the union's new leader has adopted an aggressive negotiating position, so the chance of a partial strike this year could be more likely than last year, which puts at risk its revenue growth as a shortage of chips used in cars is expected to ease in the coming months.

When 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.

South Korea's economy was already hit with a blow in June when unionized truckers went on a nationwide strike for more than a week to protest soaring fuel costs, an action that crippled ports and industrial hubs.

In May, the annual inflation rose to 5.4%, the fastest in nearly 14 years, adding to the risk of a weaker domestic demand in Asia's fourth-largest economy.

Hyundai Motor's shares fell by 0.3% compared to the 1.2% fall of the benchmark KOSPI.