Wage War: These big automakers in South Korea are facing pressure for wage hike, unions are voting

Top automakers have been caught in the wave, with unions at Hyundai Motor Company and Kia Corporation planning to down tools, pushing for a hike in minimum wage and mandatory retirement age. Both companies made record profits in 2022 and now employees are looking for a bigger share for themselves.

Steelmaker Posco is also facing a strike over wages, and the Railway Employees Union is planning a boycott next week that would cause widespread disruption.

"Workers are grappling with inflation, especially rising electricity costs, but the government is cutting fiscal spending," said Kim Dae-jong, professor of business administration at Sejong University in Seoul.

President Yoon Suk Yeol has taken a tougher stance on unions than predecessor Moon Jae-in since taking office in May last year, prioritizing labor reforms. In December, he convinced truck drivers to return to work after a two-week strike, causing a surge in his approval ratings.

Still, the number of strikes at Korean companies with more than 300 employees is expected to hit 64 in 2022, the highest since 2019, according to economist Park Sung-bok at the Pai-Touch Institute in Seoul.

What are the main demands?
The strikes at Hyundai and Kia, which have about 70,000 union members combined, could impact other industries given their size and ties to the Metal Workers Union, the most influential group for unionized workers in the country.

Kia workers are voting from 11 a.m. to 8:20 p.m. Friday on whether to strike. Hyundai has the largest union in South Korea in terms of number of members. Hyundai is facing the threat of a four-hour partial strike for two days next week if the demands are not met.

Employees of both the automakers are demanding an increase of 184,900 won ($140) (about Rs 11,505) in monthly base salary, bonus and raising the retirement age from 60 to 64 years.
According to a Hyundai union representative, the average annual salary of Hyundai and Kia factory workers is 90 million won (about Rs 56 lakh). This is roughly equal to the average salary of an economist at the central bank of South Korea.

Unions also want more investment in plants and facilities for the production of electric vehicles in South Korea to help protect jobs. Kia and Hyundai, which plan to sell two million EVs annually by the end of the decade, are facing pressure in the US and Europe to ramp up production in those regions.

"If Hyundai and Kia raise the retirement age, other industries will follow," said Kim Pil-soo, a professor of automotive engineering at Daelim University College in the city of Anyang. "Their workforce is already too old because Hyundai and Kia don't lay off people as much as other industries do," he said. He said that companies should rely more on automation and young workers in their factories.