Hyundai Motor, Kia in dilemma over ‘special bonus’ as unionized workers ramp up pressure

Hyundai Motor and Kia headquarters in southern Seoul / Courtesy of Hyundai Motor Group

By Lee Min-hyung

Hyundai Motor and Kia are in a dilemma over their labor union’s repeated demands for a “special bonus,” as unionized workers threaten to suspend any extra work for the first 10 days in March unless management accepts their request, according to industry officials, Thursday.

The collective action is feared to hamper the carmakers’ vehicle production for exports if workers continue to stage similar protests until they come to terms with management. The union urges management to provide a higher level of incentives than that of last year after the carmaker chalked up record-high earnings last year.

The workers demand the companies offer a special bonus as cash and stocks worth more than the 6 million won ($4,495) they received last year.

But the carmakers rejected the bonus, which had been offered in the first half for the past two years. They decided instead to provide only one bonus by converging it with the one provided annually in the latter half after a wage negotiation.

In 2023, Hyundai Motor Group offered a special bonus worth 4 million won to all of its employees, but the decision sparked another controversy, with labor unions of other Hyundai affiliates — such as Hyundai Mobis and Hyundai Steel — urging management to take a similar step as the carmaker.

Hyundai Motor and Kia still rely heavily on manufacturing their vehicles in Korea. Of particular concern is that they manufacture almost 70 percent of their hybrid vehicles in Korea for exports. The figure rises to 90 percent when it comes to exports for electric vehicles.

The carmakers are on track to reinforce their group-wide efforts to boost sales for the eco-friendly vehicles, but the labor protest is putting the brakes on the drive.

Industry officials said the repeated protests from the group’s union workers will drag down their manufacturing competitiveness in their home territory.

“It leaves much to be desired that the unions engage in such hardline stances for decades, even at a time the union members receive an annual salary of more than 100 million won,” an official from a domestic carmaker said.

“The production risk — sparked by what appears to be excessive demands from the union — may pose an increasingly negative impact on expanding its global presence. For instance, demand for hybrid vehicles is on the rise here and abroad, but any possible production setback may cause inconveniences to customers who may have to wait for more months before receiving their pre-ordered vehicles.”