South Korea’s three biggest car makers face the threat of significant lost production after their unions said on Monday they will extend recent strike actions in a flare-up of labour unrest after years of relative calm.
Unionised workers at Hyundai Motor Co., 005380.SE +1.11 percent the country’s largest car maker by volume, will strike for eight hours on Friday to press for higher pay and better working conditions. The union staged a strike on July 13, the first at Hyundai’s South Korean plants in three years.
At Kia Motors Corp., 000270.SE +0.27 percent a Hyundai affiliate, its union has scheduled an eight-hour strike at the company’s domestic plants for July 20 after a strike on July 13, its first in two years.
Meanwhile, workers at general Motors Co.’s GM -1.22 percent South Korean unit plan to strike for several hours apiece on Tuesday and Friday. GM Korea’s union held similar strikes on three days earlier this month. The company faced no strike action in 2009 and 2010, and only a brief strike last year.
Analysts said the relatively short duration of the strikes so far and those planned means that output can be made up for through overtime work, but if the disputes continue into August they may have an impact on sales for the third quarter.
At Hyundai and Kia the unions are asking for a monthly pay increase of 151,696 won ($132) and for 30 percent of the companies’ net profit for performance-based pay. The unions also want an end to night shifts, with all staff leaving assembly lines before midnight after eight hours of work.
The companies are reluctant to make changes to shifts that would lead to a reduction in output at a time when demand remains strong and inventory low.
“To adopt the daytime-only shift system, workers would have to improve productivity by increasing the number of vehicles built per hour or the company would have to expand production capacity by hiring more workers,” Cho Seung-woo at Woori Investment & Securities said, adding that it’ll be hard for management and the unions to find common ground.
Hyundai and Kia said they suffered a combined production loss of 7,000 vehicles valued at 135 billion won ($118 million) as a result of the July 13 strikes.
Hyundai workers will refuse to work overtime between July 25 and July 27, union spokesman Kwon Oh-il said. But the union “will continue talks with the company on July 18, 24, 26 to reach an agreement,” he said.
GM Korea said it suffered a total production loss of 3,700 vehicles as a result of the recent strikes. Its union is demanding a monthly salary increase of 151,696 won, a permanent transition to a two-shift work system, and bonuses equivalent to five months of wages.
Car makers aren’t alone in facing strike action in South Korea, which has a history of labour unrest.
Last week, the union representing banking workers voted for its first strike in 12 years to protest the possible sale of the government’s stake in Woori Finance Holdings Co. WF -1.62 percent -By Kyong-Ae Choi