The collective bargaining proposal finalized by the Hyundai Motor (005380.KS) labor union on Tuesday contains excessive demands. The union is seeking 30% of the company's 10.36 trillion won ($7.6 billion) net profit from last year, or 3.11 trillion won, as performance bonuses, while also demanding that employees at supplier companies receive equal shares. The union further insisted on the full introduction of a "complete monthly salary system" that guarantees fixed pay regardless of hours worked, in preparation for reduced working hours from the deployment of artificial intelligence (AI) robots. Currently, technical (production) workers are subject to a wage system based on hourly rates and overtime and special-shift pay. The demand to convert this into a fixed-amount structure, similar to the daily quota system used by commercial taxi drivers, is unreasonable.
This bargaining proposal marks the first case in which a prime contractor's union has placed supplier performance bonuses on the collective bargaining table since the implementation of the Yellow Envelope Act. As the law expanded the employer responsibility of prime contractors, the prime contractor's union has begun using the working conditions of subcontractor unions as leverage. The complete monthly salary system is also problematic. While the union's demand likely stems from concerns about wage reductions due to changes in the production environment, demanding that wages be preserved even as working hours decrease goes beyond undermining corporate competitiveness and borders on moral hazard.
The global auto industry is in the midst of a battle for supremacy in future mobility, including autonomous driving. Despite tariff burdens from the United States, Hyundai Motor has decided to invest trillions of won in developing software-defined vehicles (SDVs). In this context, if supplier performance bonuses and a complete monthly salary system were to be realized, the cost burden would grow uncontrollably. The union has taken the position that it will not rule out a general strike if its bargaining proposal is not accepted. If negotiations break down and even some production lines come to a halt, operating losses would be inevitable, and future investments for new growth engines would also be held back.
The Hyundai Motor union must now rein in its excessive demands and present a realistic bargaining proposal. Increased cost burdens on prime contractors will inevitably lead to reduced orders for suppliers or pressure to lower unit prices. Only when labor and management coexist can jobs increase and the fruits of growth reach everyone. At a time when business-constraining laws such as the Yellow Envelope Act are piling up, it is untenable for the union to further sap corporate vitality. The Hyundai Motor union must not cling to its unreasonable bargaining proposal. The ruling party and government, too, must not merely pay lip service to corporate competitiveness but should accelerate efforts to supplement laws that constrain businesses.
