The Hyundai Steel labor union announced a general strike on the 26th. This follows the second general strike after negotiations for wages and collective agreements (the wage collective agreement) broke down in January. Hyundai Steel has been negotiating the wage collective agreement since September of last year, but opinions have not converged on performance bonuses and other issues.
The union is reportedly demanding "the highest level within the group." Previously, it rejected the company's final offer, which included a base salary of 450% and a fixed performance bonus of 10 million won. Some analysts suggest that the union's demands stem from the inability to achieve significant differences with other group companies despite showing good results in 2021.
On this day, the Hyundai Steel union plans to conduct a general strike and rally for 24 hours at the Dangjin steel plant in Chungcheongnam-do. The union decided on the general strike, citing that the company violated its promise to propose additional measures during practical negotiations.
The ongoing strikes by the union are expected to significantly impact Hyundai Steel. The company reported that the union's strike last month resulted in a production loss of 270,000 tons in the cold rolled institutional sector, leading to approximately 25.4 billion won in damages. Although cold rolled production is not proceeding normally, there are no supply disruptions due to inventory.
Earlier, Hyundai Steel decided on its first workplace closure since its founding due to a union strike over cold rolling machinery (Pickling Line/Tandem Cold Mill). On the 11th, however, it lifted the workplace closure after 16 days, and the union also withdrew its partial strike, raising hopes for a resolution to the wage collective agreement. However, differences remain, and the union is alternating strikes at the PL/TCM and the Continuous Galvanizing Line.
Some analysts point out that the ongoing labor dispute at Hyundai Steel for over six months is rooted in the 2022 wage collective agreement. Hyundai Steel reported a revenue of 19.9915 trillion won for 2021, marking a 28% increase from the previous year, while operating profit surged 5421% to 2.2998 trillion won. The operating profit margin reached 12%. Based on this, Hyundai Steel agreed to a wage collective agreement in 2022 that included a base salary of 300% and a fixed performance bonus of 13.3 million won.
In 2022, Hyundai Motor and the labor union agreed to a performance bonus of 200% of the base salary with a fixed amount of 5.5 million won, along with a 100% incentive and 20 shares of stock. At that time, the value of 20 shares of Hyundai Motor stock was approximately 3.8 million won. This represented a difference of around 4 million won compared to Hyundai Steel's 2022 wage collective agreement, whereas Hyundai Motor provided a special incentive of 4 million won to all employees in 2022. Hyundai Motor's revenue for that period increased by 10% to 55.60051 trillion won, but its operating profit decreased by 14% to 661.6 billion won, resulting in an operating profit margin of only 1.5%.
After Hyundai Motor provided the special incentive, the Hyundai Steel union occupied the factory director's offices, including the president's office at the Dangjin steel plant, demanding the same special incentive and launched a partial strike. The Hyundai Transys union also demanded the payment of the special incentive.
In the 2023 wage collective agreement, Hyundai Steel agreed to a fixed amount of 30 million won, while Hyundai Motor agreed to a base salary of 400% with a fixed amount of 10.5 million won and 15 shares of stock. The Hyundai Motor Group evaluates performance based on operating profit margins, with Hyundai Steel's operating profit margin for 2022 being 6.2% and Hyundai Motor's being 4.3%.
Subsequently, the steel industry fell into a downturn, and Hyundai Steel recorded a revenue of 21.6094 trillion won in 2023, down 9% from the previous year, along with a 56% decrease in operating profit. In contrast, Hyundai Motor achieved a revenue of 78.0338 trillion won in 2023, up 19.5%, with an operating profit of 6.6710 trillion won, reflecting an increase of 136%. The operating profit margins for Hyundai Steel and Hyundai Motor were 3.0% and 8.5%, respectively.
Hyundai Motor reached an agreement in the 2024 wage collective agreement for a base salary of 500% with a fixed amount of 18 million won and 25 shares of stock as performance bonuses. This amount is at least 14.7 million won higher than the proposal made by Hyundai Steel. The Hyundai Steel union has rejected the company’s proposal and is demanding the highest treatment within the group. An industry source noted, "During the periods of good performance, the performance bonuses were similar to those offered by Hyundai Motor, but when the performance was poor, the differences became significant, leading to discontent."