Hyundai Motor Union Workers in South Korea Reject Wage Agreement

  • Union workers reject wage deal for first time since 2008
  • Profit has declined for 10 consecutive quarters at Hyundai

Hyundai Motor Co.’s workers in South Korea rejected a tentative wage agreement reached between management and the union leadership, a move that may weigh on the automaker’s efforts to reverse 10 consecutive quarters of profit declines.

A total of 78 percent of 45,777 union members eligible to vote turned down a deal reached on Aug. 24 that included a monthly wage increase of 58,000 won ($51) and incentives, Hyundai Motor said in a text message on Saturday. The rejection is the first time since 2008 that unionized workers of South Korea’s largest automaker voted down a wage deal, Jang Chang Yeol, union spokesman, said by phone.

“Many of our members didn’t agree with the tentative deal since they felt the wage benefits were less generous than last year’s wage package,” Jang said. The negotiations will resume in September, he said.

A failure to reach an agreement would set the automaker up for more strike action and loss of production at a time when demand in South Korea and emerging markets remain tepid, potentially leading Hyundai to miss its sales target for the second consecutive year. A series of strikes that started in July has led to a production loss of 65,500 cars with a value of 1.47 trillion won, according to the company.

Hyundai shares fell 1.5 percent to 133,500 won in Seoul trading as of 10 a.m., the biggest decline in more than a week. The benchmark Kospi Index fell 0.4 percent.

Before it's here, it's on the Bloomberg Terminal.