SEOUL, Aug 25 (Reuters) – Hyundai Motor’s (005380.KS) unionised workers in South Korea voted on Friday for possible strike action after two months of talks with the company over wage increases and an extension of the retirement age stalled last week.
The union, one of the biggest in the country with about 44,000 members, said 88.93% of its members had approved strike action unless the company accept the demands.
A strike would mark the first such action in five years related to wage negotiations at the South Korean carmaker and could disrupt delivery of some popular vehicles, which Hyundai has been struggling to ramp up due to prolonged component shortages.
The union is seeking a minimum basic monthly pay increase of 184,900 won ($139) and a performance pay equating to 30% of Hyundai’s 2022 net profit. It is also demanding an increase to the retirement age to 64 from 60.
A union official said it will continue working-level negotiations with the management regardless of the result.
Hyundai Motor did not immediately respond to a Reuters request for comment.
South Korea’s rising life expectancy and weaker social safety net, such as retirement pension, have attributed to workers’ demand to raise the retirement age, according to experts.
“South Korea has relatively low pension replacement rates, compared to other advanced countries in Europe,” said Park Ji-soon, a social security law professor at Korea University’s School of Law.
“While those advanced European countries have replacement rates at about 60-70%, South Korea’s rate practically stands at about 30%, which make it difficult for people to replace their pre-retirement wages,” he said.
Unionised workers at Hyundai in South Korea held a four-hour strike for one day in July in support of a general strike, but it was not related to the union’s wage negotiations with the management.
Analysts said the union would likely avoid prolonged industrial action partly due to unfavourable public sentiment, as the auto industry remains one of few bright spots in the country’s sluggish economy.
“We are not expecting the strike to last too long even if the union does stage a strike. However, if the strike lasts longer than three days, which could be viewed as about 10% of Hyundai’s monthly output, it could visibly disrupt Hyundai’s operations,” said Kim Jinwoo, an analyst at Korea Investment & Securities
Shares in Hyundai Motor closed down 0.1%, versus the benchmark KOSPI’s (.KS11) 0.7% fall.
($1 = 1,328.0600 won)
Reporting by Heekyong Yang; Editing by Shri Navaratnam, Michael Perry and Mike Harrison
