Bloomberg reported that for Hyundai Motor Co, Mr Moon Yong Moon's labor protests during the 1990s became such a nuisance that South Korea's largest carmaker laid him off three times. The strategy didn’t work.
Mr Moon, leader of Hyundai Motor's labor union, is threatening the automaker with its first strike since 2008 unless the Seoul based company increases wages and reduces working hours. Yesterday, more than 70% of the 45,000 member guild voted in favor of empowering Moon and Hyundai's union leaders to stage walkouts.
The vote is a blow to Hyundai, whose improvement in labor relations helped the carmaker and affiliate Kia Motors Corporation increase sales faster than any other major global auto group the past four years. Hyundai Motor estimates strikes from 1987 to 2008 led to lost sales of more than 1 million vehicles valued at KRW 11.6 trillion.
Mr James Rooney CEO of consulting firm Market Force Co said that "This kind of harking back to the past is not helping Korea. Foreign investors have already got a distorted view of Korea. They think we are a place that has these terrible riots and steel club wielding people and people setting themselves on fire and stuff like that. And so when they hear about this, it will just be, Oh, Korea again."
Hyundai Motor fell for a sixth straight day, its longest streak of declines in 11 months. It dropped 3.1% to close at KRW 218,500 in Seoul, while the benchmark Kospi fell 2.2%. Shares of Hyundai, which have jumped more than fivefold since the end of 2008, and those of Kia have been underperforming the benchmark index in the past three weeks amid mounting concerns about labor strikes.
According to data compiled by the nation’s Ministry of Employment and Labor, Hyundai Motor, which has the nation's biggest guild, has symbolized the decline in clashes with unions that had plagued South Korean businesses as wages improved and employers shifted production overseas. The number of South Korean work days lost on labor disputes fell to 429 by 2011, a 73% drop from a decade ago.
According to both unions, workers at Seoul based Kia, which counts Hyundai Motor as its biggest shareholder, also voted in favor of pursuing a strike for the first time since 2009. That means workers at Hyundai Motor and Kia will go on an eight hour stoppage tomorrow. Subsequent walkouts haven't been announced.
Mr Kim Gi Hyuk, a Hyundai Motor union spokesman, said that Hyundai Motor and Kia workers are demanding a KRW 151,696 increase in monthly base pay and that the companies return 30% of net income to employees as bonuses. Other demands include switching Hyundai Motor's plants to two eight hour shifts from the current double 12 hour rotation system.
Mr Moon sought the union vote after wage negotiations that began in May failed to yield an agreement. Hyundai Motor's union walked out of negotiations in late June 2012, saying management lacked sincerity.
Hyundai Motor's management will seek further talks to resolve its differences with the union. While Hyundai Motor, where union workers earn an average of about KRW 45 million a year, has periodically faced partial stoppages in the past four years because of labor disputes, none was officially sanctioned and they rarely lasted beyond several hours. Hyundai Motor's last full-blown strike occurred in 2008, when a 12 day walkout cost the company an estimated 44,645 vehicles or KRW 691 billion.
Under Korean rules, organized work stoppages are legal only if the union files for a 10 day mediation period to the National Labor Relations Commission and the majority of union members approve a strike. Failure to do so can result in the company filing an injunction to prevent walkouts.
Mr Moon was elected as Hyundai's union leader last year after promising to be a tougher negotiator than his predecessor, Mr Lee Kyung Hoon, who was elected to a two year term in 2009 after pledging to curb unnecessary strikes.
Past Hyundai protests have resulted in violent clashes in which unionists would wield steel pipes and throw Molotov cocktails at police. In 1993, demonstrations were so disruptive that the Bank of Korea lowered its gross national product estimate.
Source - Bloomberg
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