The Hyundai Motor union's demand for "payment of 30% of net profit as bonuses," which it has been pressing for 22 years, is emerging this year as a real labor-management flash point beyond a declarative slogan. As the chip industry reaches deals to tie a set percentage of operating profit to the bonus pool, the Hyundai Motor union, known as a hard-line union, could push for a higher bonus than in previous years. If multi-trillion-won bonuses become reality, there are concerns it would disrupt Hyundai Motor's investments at home and abroad and lead to cost-cutting pressure on suppliers.
According to the auto industry on the 2nd, the Hyundai Motor chapter of the Korean Metal Workers' Union is demanding in this year's wage and collective bargaining that "30% of the previous year's net profit be paid as bonuses." Hyundai Motor's consolidated net profit last year was 10.3648 trillion won, which means 3.1094 trillion won would have to go to bonuses under the union's demand. That is more than the 2.6 trillion won Hyundai Motor paid out as shareholder dividends last year.
The Hyundai Motor union has insisted every year for 22 years without fail that 30% of the company's net profit be shared as bonuses. It started in 2004. Even in 2020, when wages were ultimately frozen due to the pandemic, the Hyundai Motor union included this in its demands. An auto industry official said, "Until now it was a declarative demand, but this year, even if 30% of net profit is difficult, fierce negotiations will be held to extract as much as possible based on that."
The "profit-linked bonus" that began in the chip industry is spurring the Hyundai Motor union, a representative hard-line union. An auto industry official said, "As this is the first test for the union's new leadership, it may take a tougher line." In fact, the Hyundai Motor union has secured the legal right to strike and has decided to suspend all overtime from the 6th of this month.
The Hyundai Motor union's demand to "pay 30% of net profit as bonuses" could weigh on Hyundai Motor more than in previous years. Unlike Samsung Electronics and SK hynix, Hyundai Motor's performance is not improving. Last year's net profit fell 21.7% from 2023's 13.2299 trillion won. According to the average of securities firm forecasts compiled by FnGuide, this year's net profit is expected to rise 9.7% to 11.3669 trillion won. That suggests it will be hard to recover to the 2024 level.
Amid this, investment bills are set to arrive in tens of trillions of won starting this year. Looking at Hyundai Motor's investment plans promised for completion from this year through 2029–2030, a total of 125 trillion won will be invested in Korea alone. It must invest $26 billion (about 40.4 trillion won) in the United States and $5 billion (about 7.8 trillion won) in India, respectively.
If several trillion won is spent on bonuses under performance pressure, these investment plans will inevitably face setbacks. Lee Hang-gu, a special professor at Pyeongtaek University, said, "With annual net profit only around 10 trillion won, Hyundai Motor has already embarked internally on strong cost reductions," adding, "In this situation, large-scale bonuses would only delay investments."
Polarization between Hyundai Motor and its suppliers is also unavoidable. Lee said, "To maintain investment plans as much as possible under fiscal pressure, it will have no choice but to demand cost reductions from suppliers, which will further aggravate the difficulties of suppliers whose results have already deteriorated," adding, "If suppliers bring up the yellow envelope law, a new labor law aimed at strengthening the bargaining rights of subcontract workers, the situation could become very complicated."
Hyundai Motor labor and management are set to resume talks on the 2nd. If differences over core issues such as bonuses are not narrowed, the action could expand from a suspension of overtime to a partial strike. Last year, the Hyundai Motor union held a partial strike totaling 16 hours over three days from Sept. 3 to 5, which caused production disruptions of more than 7,000 vehicles. The sales loss was about 300 billion won.