SEOUL — Hyundai Motor Co’s unionized workers in South Korea voted for a possible strike for the first time in four years over demands for higher wages and anger that management was prioritizing overseas investment.
The union, one of the biggest in the country with more than 46,000 members, said on Friday that 81.63% of its voting union members had approved strike action unless the company accept their demands.
If the union does strike, other industries could follow suit, threatening to slow South Korea’s manufacturing-reliant economy, which last month saw exports grow at their slowest pace in more than 1-1/2 years.
The union is seeking a minimum basic monthly pay increase of 165,200 won ($127) and a performance pay equating to 30% of Hyundai’s 2022 net profit, as soaring inflation cuts into workers’ wages.
It is also demanding Hyundai invest in the country to support new businesses including urban air mobility, purpose-built vehicles and electric vehicle-related auto parts manufacturing.
“Inflation has been speeding up even after we came up with our demand, so many of us feel that our wages need to keep up with this soaring inflation,” a union member at Hyundai Motor told Reuters on condition of anonymity.
Negotiations between Hyundai’s union and management, which started in May, stalled last month.
The union’s demands come after Hyundai Motor Group, which houses Hyundai Motor and Kia Corp, announced more than $10 billion investment plans in the United States by 2025 including $5.5 billion EV and battery facilities in Georgia.
The auto group said in May it would also invest 21 trillion won ($16 billion) through 2030 to expand its EV business in South Korea.
In March, Hyundai Motor said it targets to achieve a 7% market share in the global EV market by 2030, with an annual sales target of 1.87 million vehicles.
Analysts say as the union’s new leader has adopted an aggressive negotiating stance, the chances of Hyundai facing a partial strike this year could be more likely than last year, putting at risk its revenue growth just as a chips shortage used in cars is expected to ease in coming months.
“If the union decides to go on strike, Hyundai would face inevitable production output loss, when they need to ramp up production to meet strong car demand,” said Cho Soo-hong, an analyst at NH Investment & Securities.
South Korea’s economy was already dealt a blow in June when unionised truckers went on a nationwide strike for more than a week to protest soaring fuel costs, action that crippled ports and industrial hubs.
Annual inflation accelerated to 5.4% in May, the fastest in nearly 14 years, adding to the risk of weaker domestic demand in Asia’s fourth-largest economy.
Shares of Hyundai Motor closed down 0.3%, versus the benchmark KOSPI’s 1.2% fall.