Hyundai Motor Co’s (005380.KS) unionized workers in South Korea voted on Monday to accept the lowest bonus offered in nearly two decades amid widespread restructuring in the auto industry and a damaging trade dispute with Japan, APA reports citing Investing.
With the approval, announced on Tuesday, Hyundai avoided a walkout by workers for the first time in eight years.
Hyundai’s South Korean workers, who have staged strikes in all but four years since the union was created in 1987, had drawn media and public criticism for threatening to walk out despite their relatively high annual wage of 92 million won ($75,866) on average as of 2018, plus benefits and job security.
The deal came with tightened export curbs by Japan threatening to damage Asia’s fourth-biggest economy, weighing on an auto industry already struggling with production cuts and job losses in the face of a slowdown in exports to the United States, Europe and other countries.
U.S. automaker General Motors Co (GM.N) last year closed one of its South Korean factories and reduced headcounts, while Renault’s South Korean unit is bracing for production cuts.
In a statement issued after the vote results came out, union leaders thanked members for supporting their decision to hold off from staging a strike “considering a U.S.-China trade war, a Korea-Japan economic war and the auto industry’s downturn”.
Fifty-six percent of Hyundai workers who cast ballots approved the deal, which includes a bonus equivalent to one and a half months’ salary plus 3 million won - totaling the lowest bonus payment since 2000, union officials said.
The deal, which also includes one-time payments of up to 6 million won to settle a legal dispute over wages, will be worth around 16.27 million won in total, according to a leaflet from one of union factions.
The deal will help Hyundai avert production losses in South Korea, at a time when Hyundai is expected to bounce back from six consecutive years’ of profit decline, driven by favorable currency exchange and new sport-utility vehicles (SUVs).
South Korea accounts for 37% of Hyundai Motor’s total production as of last year, with the automaker reducing its exposure to domestic production in favor of overseas output.
Meanwhile, other automakers are bracing for tough annual wage negotiations. GM wants to freeze a base wage this year for a second year in a row, a plan opposed by its South Korean union which has said it could stage a full strike this month.
Renault Samsung, a unit of French automaker Renualt SA (RENA.PA), also plans to cut production starting next month, with shipments of Nissan’s Rogue SUV to the United States to be phased out this year, clouding job prospects.