Auto companies anxiously await court ruling on wage definition

By Lim Chang-won Posted : August 23, 2017, 10:39 Updated : August 23, 2017, 17:43

[Yonhap Photo]



Helped by strong labor union activities, auto company workers are relatively well paid, along with good fringe benefits and welfare, but concerns are growing about low productivity and frequent strikes more than ever as South Korean cars are losing their competitiveness abroad.

At the end of 2016, the average income of workers at five car manufacturers stood at 92.13 million won (81,387 US dollars), which is higher than that of Volkswagen and Toyota, according to the Korea Automobile Manufacturers Association (KAMA), a lobby group for auto companies.

Unionized workers at Hyundai Motor, the country's largest carmaker which together with its affiliate Kia Motors controls more than 60 percent of the domestic market, are dubbed "labor aristocrats", but they always remain ungratified, struggling to find a new source of extra income.

Kia is now locked in a legal battle over overdue wages as workers insist that overtime, bonuses, and other one-time incentives should be recognized as part of their ordinary wages.

Hyundai Motor and other companies are nervously waiting for a court ruling on August 31 that could trigger a flurry of similar lawsuits by labor unions. Despite legal ambiguity in defining ordinary or basic wages, companies and unions have observed a gentlemen's agreement to exclude regular bonuses from basic salaries.

In a seminar on Tuesday, Kia CEO Park Han-woo called for a considerate decision saying his company cannot afford to make retroactive payments worth three trillion won if the court rules in favor of workers.

"It may cause a big stir in our labor market," he said, adding the extra financial burden would undermine Kia's profitability and competitiveness at a time when it is suffering from poor sales in China and the United States.

Park accused Kia's union baron of ignoring a 30-year-old practice for selfish interests while workers responded with a crippling walkout which followed a series of partial strikes by Hyundai's union notorious for its militant activity. For decades, strikes have been an annual event, prompting Hyundai to increase production overseas.

South Korean auto companies are struggling with slow sales at home and abroad. KAMA President Kim Yong-geun warned that the auto industry would suffer a further setback if the court accepts demands by Kia workers.

The association said that sales and production of South Korea's auto industry have declined over the last two years while the combined amount of R&D spending by Hyundai and Kia stood at $3.4 billion last year, far lower than Toyota and Volkswagen.


 
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