As performance bonus increases at corporations with favorable business conditions, including Samsung Electronics and HD Hyundai Heavy Industries, have become a focal point in wage and collective bargaining talks, it was confirmed on the 20th that the Hyundai Steel labor union also demanded a 150% increase in performance bonuses in this year's negotiations. The union says the company's operating profit rose year over year despite workforce reductions last year, increasing operating profit per person, so wages should be raised accordingly.
According to the steel industry on the 20th, the Hyundai Steel labor union held the first introductory meeting for this year's wage and collective bargaining on the 8th at the Dangjin Steelworks in South Chungcheong. It is the first time in nine years since 2017 that Hyundai Steel labor and management have begun talks as early as May. Typically, Hyundai Steel's bargaining has opened in the second half due to lengthy prior-year bargaining periods and a passive response to bargaining demands.
Before the wage talks, the Hyundai Steel union drafted a common set of demands from its five chapters and shared it with management. The union included a request to increase this year's performance bonus by 150% from last year. Last year's Hyundai Steel bonus totaled about 16 million won, consisting of 300% of base pay plus a lump sum of 5 million won.
The union made this request because last year's company results, which serve as the basis for calculating bonuses, improved from the previous year. While Hyundai Steel's revenue last year fell 2.1% year over year to 22.7332 trillion won, operating profit rose 37.4% over the same period to 219.2 billion won.
The union's position is that because last year's improvement came alongside a workforce reduction trend, operating profit per person increased even more, so this year's bonuses should be raised. As of the end of last year, Hyundai Steel had 11,127 regular employees, down 2% from the previous year, with larger reductions reported among technical staff.
Along with this, the union also included in its demands the Metalworkers' Union's common requests: a 140,000 won increase to base pay, higher step pay by job grade, and improvements to welfare programs such as vehicle purchase assistance. The size of the base pay increase is also about 87% larger than last year's 80,000 won settlement.
The union said, "Our demands have never been accepted as is, but we delivered them in light of factors such as last year's improved performance despite the workforce reduction trend," adding, "We view it positively since the company moved quickly to negotiate." Hyundai Steel labor and management have held two bargaining sessions as of this date.
However, some say that given the uncertainty in the steel industry's business environment this year, it may not be easy to accept these union demands.
Hyundai Steel posted 15.7 billion won in operating profit on a consolidation basis in the first quarter, swinging to a profit year over year, but recorded 72.5 billion won in operating losses on a separate basis, with the operating loss widening by 16.4 billion won from last year.
As the burden of rising raw material prices was reflected first, profitability deteriorated, while the affiliate's tariff refund effect and base effects related to unrealized gains offset this, improving only the consolidated results.
The steel industry is suffering from deteriorating profitability due to higher logistics and raw material costs stemming from a surge in international oil prices following the war involving the United States–Israel and Iran. As a result, an industry upturn is crucial for improving results, but Hyundai Steel said on its first-quarter conference call that it expects the recovery to be slow.
Amid these conditions, the company is also pushing a U.S. electric arc furnace integrated steel mill construction project, adding financial burden. In the first quarter, Hyundai Steel made an additional investment of 707.4 billion won in its local subsidiary (Hyundai Steel USA Corp) for the U.S. steel mill business. The company's total liabilities stood at 15.195 trillion won in the first quarter, up 4.1% year over year.
Pressure from unions to raise performance bonuses on the back of improved results is emerging across industry. The demand from the Samsung Electronics union for higher performance bonuses, which the government is considering addressing with an emergency adjustment order, has drawn attention from foreign media. The Doosan Enerbility union included in this year's bargaining demands an improvement to the bonus calculation method, which currently has a cap. The HD Hyundai Heavy Industries union included a demand to share at least 30% of this year's operating profit as bonuses. The Hanwha Ocean union is also said to be demanding improvements to the criteria for calculating bonuses.