Hyundai Motor Group is entering the second half of the year under growing labor uncertainty, with wage negotiations at both Hyundai Motor and Kia showing little sign of progress. As unions escalate pressure through collective actions, concerns are mounting over potential disruptions to vehicle production.
Hyundai Motor's labor union began refusing overtime and weekend work on Monday after negotiations with management failed to bridge differences over wages, bonuses and other key issues.
Although the action does not amount to a full-scale strike, industry observers expect it to reduce production capacity by shortening operating hours at manufacturing plants.
The union is demanding a monthly base salary increase of 149,600 won, along with a performance bonus equivalent to 30% of the company's net profit from last year. It is also seeking improvements to employee welfare and working conditions.
Management has proposed a package that includes a 79,000-won increase in monthly base pay, a performance bonus equal to 350% of monthly salary plus 9 million won in cash, and 10 shares of Hyundai Motor stock for each employee.
Despite multiple rounds of negotiations, the two sides remain far apart, particularly on the size of wage increases and performance-based compensation.
The latest round of collective bargaining took place Monday afternoon at Hyundai Motor's Ulsan plant, but analysts said reaching an agreement in the near term remains challenging given the significant gap between labor and management.
Hyundai Motor's union has already secured the legal right to strike after members approved industrial action in a vote and South Korea's National Labor Relations Commission suspended mediation efforts. If negotiations ultimately collapse, the union would be able to launch a full-scale strike at any time.
Industry officials warn that an extended strike could disrupt production for a second consecutive year, potentially affecting domestic manufacturing as well as exports from one of Hyundai Motor's key global production bases.
Kia is also preparing to step up pressure on management.
The automaker's union plans to hold a large-scale rally at its Sohari plant in Gwangmyeong on Wednesday as part of what it describes as a full-scale campaign for improved compensation and working conditions.
Kia's union is seeking a performance bonus equal to 30% of the company's operating profit, while also demanding an extension of the retirement age, the introduction of a 4.5-day workweek, and broader improvements to the wage system.
Job security at Kia's Gwangju plant has emerged as another major point of contention. The union has called for concrete measures to secure future production volumes and new business assignments after the company decided to discontinue production of large buses at the facility.
The simultaneous labor disputes at Hyundai Motor and Kia have heightened concerns that prolonged negotiations could weigh on South Korea's automotive industry at a time when global competition is intensifying. Any prolonged disruption to production could affect exports, supply chains and the companies' ability to respond quickly to overseas demand.
"The global automotive industry is increasingly competing on the ability to deliver vehicles without interruption, not just on product quality," said an automotive industry expert. "If labor disputes lead to repeated production disruptions, they could undermine customer confidence and weaken long-term competitiveness. Both labor and management need to focus on sustainable growth rather than short-term gains."
