Strike clouds gather over Korean industry: Hyundai Motor walks out for first time in a decade, Posco faces first-ever work stoppage

Hyundai Motor union to stage full 8-hour strike Friday

Parts makers and subcontractors join, squeezing supply chain

Last month's losses estimated at 1.6 trillion won; Kia talks a wild card

Posco union secures strike mandate but says talks will continue

Workers at Hyundai Motor's Ulsan plant leave early through the Myeongchon gate in Buk-gu after a four-hour partial strike on Wednesday. [Yonhap]

Strike risks are becoming an increasingly tangible reality for South Korean industry this year, as labor unions grow more assertive amid the rollout of the so-called Yellow Envelope Act — which strengthens bargaining rights for subcontracted workers — and a widening controversy over performance bonuses tied to a percentage of operating profit.

Hyundai Motor's union has announced a full strike for the first time in a decade, halting vehicle production. Not only the company's own union but also unions at Hyundai Motor Group affiliates, parts suppliers and subcontractors have joined the action, putting pressure across the entire supply chain. Posco, too, faces the threat of its first-ever strike since its founding, after its union secured the legal right to walk out. The risk of summer labor disputes is spreading across the broader industrial sector.

Cumulative production disruption projected at 136 hours; reinstatement of dismissed workers and retirement age extension remain sticking points

Hyundai Motor's union plans to stage a full eight-hour strike on Friday and hold a rally at the company's headquarters in Yangjae-dong, Seoul, according to the automaker industry on Wednesday. Management and the union resumed wage negotiations on Tuesday after a gap of more than 40 days but failed to narrow their differences on key issues, pushing the union toward its first full strike since 2016.

When partial strikes already planned for Wednesday, Thursday, Monday and Tuesday — each four hours — are added to the full-day walkout, the cumulative production disruption is expected to reach 136 hours.

Last month, Hyundai Motor's production lines were halted for more than 60 hours, resulting in a shortfall of roughly 42,000 vehicles. Applying the company's global average selling price of 37.85 million won ($26,800) per vehicle in the second quarter, that translates to an estimated sales loss of around 1.6 trillion won. With strikes continuing this month, the total loss is expected to grow sharply.

The Ioniq 5 production line at Hyundai Motor's Ulsan plant. [Hyundai Motor]

Hyundai Motor and its union remain sharply divided over bonus increases, the reinstatement of workers dismissed for illegal activities during past union actions, and an extension of the mandatory retirement age. Management has maintained that the latter two issues fall under collective bargaining agreements and are not subject to this year's wage talks.

At Tuesday's resumed negotiations, the company proposed discussing reinstatement of dismissed workers at year-end and addressing the timing of any retirement age extension through a supplementary agreement once relevant legislation is amended. The union rejected the offer, calling it "nothing more than a show."

Subcontractor unions have also joined the action, adding further pressure on Hyundai Motor's production. The Korean Metal Workers' Union, affiliated with the Korean Confederation of Trade Unions, announced that unions at Hyundai Motor Group affiliates, auto parts makers and subcontractors would jointly stage a strike of at least four hours on Thursday. The union said it aims to secure not only a retirement age extension but also an end to Hyundai Motor Group's practice of cutting parts procurement prices and the realization of direct bargaining rights with the parent company.

Kia's early settlement a wild card: 'Discontent among Hyundai Motor workers will grow'

The Hyundai Motor and Kia headquarters building in Yangjae-dong, Seoul. [Hyundai Motor Group]

Meanwhile, Kia's accelerating pace of negotiations is expected to have ripple effects at Hyundai Motor. Historically, Hyundai Motor has concluded its wage talks first, with Kia following suit. This year, however, Kia is pushing ahead with a more generous wage offer, even as Hyundai Motor's union refuses to back down on reinstatement, retirement age extension and bonus increases — and management has yet to put forward a meaningfully improved wage proposal.

At talks held Tuesday, Kia presented its union with a second proposal that included a base salary increase of 95,000 won, a performance and incentive bonus of 350 percent plus 11.5 million won, and 45 shares of company stock. That compares favorably with Hyundai Motor's offer of an 89,000-won base salary increase, a 350 percent bonus plus 10 million won, and 15 shares of stock.

If Kia reaches a settlement first, discontent among Hyundai Motor union members — who are already absorbing wage losses from strike days — could intensify. Workers receive no pay for hours not worked during a strike, which in effect amounts to a wage cut. Kia's union has secured strike rights but has so far limited its action to refusing overtime rather than escalating further.

"Traditionally, Kia followed Hyundai Motor's lead in wrapping up negotiations," a business community official said. "As the gap between the two companies in sales and earnings has narrowed recently, Kia's union now has grounds to settle first." The official added that if Kia's union concludes its wage and collective bargaining agreement ahead of Hyundai Motor's, "the discontent of Hyundai Motor union members, who are bearing wage losses from the strike, will grow."

Posco: labor commission suspends mediation, raising prospect of first strike since company's 1968 founding

Members of the Posco union, affiliated with the Federation of Korean Trade Unions' metal workers' federation, attend a final mediation session at the National Labor Relations Commission in Sejong on Tuesday. The failure to reach an agreement has raised the prospect of Posco's first-ever strike. [Yonhap]

Posco's union also secured the legal right to strike on Tuesday, heightening the threat of the steelmaker's first-ever work stoppage. Management and the union failed to bridge their differences at a final mediation session before the National Labor Relations Commission, which suspended the mediation process. The union had already won a strike mandate in a membership vote held July 8-9, with 92.2 percent of members voting in favor.

However, both sides have said they will continue talks to avert an actual strike. In 2024, the union similarly secured strike rights but ultimately reached a wage and collective bargaining agreement after sustained negotiations. Should the union proceed with a walkout, it would be the first in Posco's history since the company was founded in 1968.

"We have held multiple additional rounds of discussions and put forward improved proposals aimed at both protecting the company's future competitiveness and taking into account employee morale, and we regret that the union chose to secure strike rights rather than continue seeking further common ground," Posco said in a statement. The company added that it plans to "continue communicating with the union and all employees about the realities of the challenging business environment."

eyre@heraldcorp.com