Hyundai Motor, S.Korea Union Reach Tentative Wage Deal

Hyundai Motor said on Tuesday it has reached a tentative wage deal with its South Korean labour union, potentially avoiding a strike and production losses at its biggest manufacturing base.

The tentative agreement came shortly after the South Korean automaker announced a plan to build a dedicated electric vehicle (EV) factory in South Korea, which will be its first new car plant in the country in almost three decades.

"The union and management have managed to reach a tentative deal to avoid a strike for the fourth consecutive year in the midst of risks, such as a prolonged global chip shortage, recession and war in Ukraine," Hyundai Motor said in a statement, adding that it would make an effort to enhance the role of its production facilities in South Korea.

The union, one of the biggest in the country with more than 46,000 members, demanded Hyundai invest in the country to support new business, including urban air mobility, purpose-built vehicles and electric vehicle-related auto parts manufacturing. One of the union's demands, building an EV-related manufacturing facility, made it into the tentative agreement.

In May, Hyundai Motor Group, which includes Hyundai Motor and Kia Corp, said it would invest 63 trillion won ($48.1 billion) in South Korea through 2025.

Separately, the South Korean auto group said it would invest more than $10 billion in the United States by 2025, which includes its plans to invest $5.5 billion in Georgia to build EV and battery facilities.

Under the agreement reached on Tuesday, Hyundai will increase workers' basic monthly pay by 98,000 won ($74.93), give each worker a one-off payment of 4 million won as well as bonus and incentives' payments, and each worker will also receive 20 Hyundai Motor shares, according to Hyundai. Overall, Hyundai Motor said each worker's annual wage would likely rise by about 9% compared to the previous year.

The deal is subject to a vote by union members on July 19, according to the union.

Hyundai Motor's unionised workers in South Korea voted earlier this month for a possible strike over demands for higher wages and anger that management was prioritising overseas investment.

Hyundai Motor workers last went on strike in 2018.

($1 = 1,309.2200 won)