Unionized workers of Hyundai Motor stage a rally in front of the firm's manufacturing plant in Ulsan, Sept. 30, 2016. Korea Times file

By Lee Kyung-min

Major local car manufacturers are experiencing a sense of crisis, hobbled by the collective threat of a walkout by unionized workers demanding wage increases and expanded benefits, according to industry watchers, Monday.

Tension is highest at Hyundai Motor, which has the largest and most militant group of unions in the manufacturing industry represented by the Korea Confederation of Trade Union (KCTU), one of two umbrella unions in the country. Hyundai's moves can lead to similar actions by its co-affiliate Kia, as well as Renault Korea Motors and GM Korea.

Hyundai has managed to avoid labor conflicts for over four years. However, weeks of deadlocked negotiations between management and labor could trigger industry-wide production disruptions at the expense of economic growth, compounded further by years of bottlenecks in automotive semiconductor supplies.

Hyundai Motor's domestic and global vehicles sales stood at 1.87 million in the first six months of this year, down 7.6 percent from a year earlier. Local sales slumped 13 percent year-on-year. Kia's local sales sank 5.7 percent in the same period.

Experts say the country's labor reform drive will be tested by whether and how well the Yoon Suk-yeol administration handles a large planned rally of 200,000 KCTU members in mid-July. At issue will be the treatment of rally participants, a gauge of the patience of the business-friendly, anti-labor administration.

Strike looming

Hyundai Motor's union claims the strike is inevitable, since management has yet to respond to the workers' demands to revise the remuneration package.

Management said the workers will be given an increase of 89,000 won ($68.40) in monthly base pay, a bonus of 200 percent of their base pay and 3.5 million won in cash. But the union workers say the base pay should be raised by 165,000 won and the firm should pay 30 percent of its net income for employee bonuses, among other demands.

Hyundai workers have given management an ultimatum that they will initiate the strike, unless their demands are met by the end of this week.

They are increasing pressure, as evidenced by the refusal to work overtime July 9, following a 71.8 percent yes vote favoring the walkout, July 1.

Further strengthening their move is a July 4 decision by the National Labor Relations Commission to suspend dispute resolution between the two.

Consumers and the country's economy will bear the full brunt of the labor actions, according to Lee In-ho, former chairman of the Korean Economic Association.

"Years of a supply crunch in automotive chips coupled with the labor risks will cloud not only the corporate outlook but also the country's growth in the long term," he said.