Hyundai faces threat of fresh round of labor strikes in South Korea

Article by Anita Panait, on July 13, 2012

Hyundai Motor Co. is now facing threats of strikes after the majority of the carmaker’s labor union members empowered its leaders to hold such actions. Around 70 percent of Hyundai’s 45,000-strong labor union voted on July 11, 2012, to allow Moon Yong Moon and other union leaders to stage walkouts unless the South Korean carmaker increased their wages and reduced their working hours.

The current labor situation at Hyundai is considered as a big blow to the carmaker, since improvements in labor relations have boosted the sales of the carmaker and affiliate Kia Motors Corp. faster than other large car manufacturers in the past four years.

Hyundai suffered financially from the series of labor strikes that plagued the carmaker from 1987 to 2008, resulting to lost sales of over a million vehicles valued at KRW11.6 trillion ($10 billion). James Rooney, chief executive of consulting firm Market Force Co. said the union’s latest action is “not helping Korea," as foreign investors have distorted views of the country.

Rooney said that foreign investors think that Korea is a place where terrible riots led by steel-club wielding people occur. He warned that once foreign investors learn of the union’s planned action, they would remember how Korea was in the past.

Hyundai Motors symbolized the drop in labor union spats that have been affecting local businesses as wages improved.  According to data compiled by South Korea’s Ministry of Employment and Labor, the number of South Korean work days lost on labor disputes dropped 73 percent to 429 by 2011 from a decade ago. [source: Bloomberg]

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