[Edaily Kim Hyung-wook Reporters Lee Yoon-hwa and Kim Ki-deok] As the Hyundai Motor labor union has significantly intensified its strike immediately after the summer vacation ended, Hyundai Motor’s production and sales plans for the second half of the year are now in jeopardy. Following production disruptions affecting 42,510 vehicles due to partial strikes last month, the union has increased the strike duration per job category from a maximum of 4 hours to 6 hours this month, leading to an expected cumulative production shortfall of 70,000 vehicles.

It’s not just Hyundai Motor. As legal and institutional uncertainties surrounding the revised Labor Union Act (the “Yellow Envelope Law”) intensify, labor disputes are escalating across all industries this summer. In the business community, concerns are growing that the Yellow Envelope Law blurs the lines between employers and the targets of labor disputes, potentially increasing labor-management conflicts and operational unpredictability, leading to growing calls for supplementary legislation.

◇ Union Raises Strike Intensity by 50%… New Car Supply Also in ‘Emergency Mode’

The Hyundai Motor Branch of the Korean Metal Workers’ Union held a Central Strike Response Committee meeting on the 11th and decided to hold partial strikes of 4 hours each on the 12th and 13th, and 6 hours each on the 14th and 18th. Based on one union member, the additional strike time totals 20 hours; when combining both the first and second shifts, the total time affecting production line operations reaches 40 hours. In particular, on the 14th and 18th, the combined daily strike time for both shifts will increase by 50%, from the previous maximum of 8 hours to 12 hours.

The Hyundai Motor union had previously staged a two-hour strike per job category from the 13th to the 15th of last month, followed by four-hour production line stoppages from the 20th to the 22nd and from the 29th to the 31st. These partial strikes, totaling 60 hours, resulted in production disruptions affecting 42,510 vehicles. Considering that the expansion of partial strikes decided today will cause an additional 40 hours of production disruptions, there are concerns that cumulative production disruptions could exceed 70,000 vehicles.

Hyundai Motor had planned to make up for its sluggish first-half performance in the second half of this year with flagship new models such as the all-new Avante and Tucson, as well as the Genesis GV90 and GV80 hybrids; however, this strike has significantly increased the likelihood of disruptions to securing initial shipments of these new models and to production schedules.

This also raises red flags for the group’s efforts to catch up with the Volkswagen Group. Hyundai and Kia sold approximately 3.6 million vehicles worldwide in the first half of this year, narrowing the gap with the Volkswagen Group (4.13 million units); however, if Hyundai fails to rebound due to production disruptions in the second half, that gap could widen again. The Volkswagen Group saw its global sales decline by 6.3% in the first half of this year, partly due to a 25.9% year-over-year drop in sales in China.

Hyundai Motor’s management and labor have yet to set a date to resume negotiations. The union is demanding a base salary increase of 149,600 won and a performance bonus equivalent to 30% of the previous year’s net profit. In addition, it is seeking to secure what it calls the “three major demands”: the reinstatement of laid-off workers, a prior agreement before the legalization of an extended retirement age, and a 50% increase in bonuses. Management has raised its offer for the base salary increase from 79,000 won to 89,000 won and proposed a performance bonus of 350% plus 10 million won, along with 15 shares of company stock, but the two sides have yet to find common ground.

◇ Intensifying Demands for “N% Performance Bonuses”… Labor-Management Tensions Escalate in the Industrial Sector

Labor-management relations at Kia are also unstable. After securing an 82% “yes” vote among eligible members in a strike authorization vote last month, the Kia labor union obtained the legal right to strike following the Central Labor Commission’s decision to suspend mediation. The Kia labor union is also demanding a base salary increase of 149,600 won, plus a performance bonus equivalent to 30% of the previous year’s operating profit and the allocation of at least 246 shares of company stock per member. The demands also include a 4.5-day workweek and an extension of the retirement age to 65. Kia’s management and labor are scheduled to continue main negotiations on the 12th and 13th, but if they fail to reach an agreement, the five-year streak of no strikes—which continued through last year—could be broken this year.

The threat of a strike is also spreading to heavy industries such as shipbuilding and steel. The HD Hyundai Heavy Industries union has demanded, for the first time this year, that at least 30% of annual operating profit be allocated as performance bonuses. Management and the union have held 14 rounds of negotiations since last June but have been unable to bridge their differences, and the union plans to file a request for labor dispute mediation with the Central Labor Relations Commission on the 14th. If the National Labor Relations Commission decides to suspend mediation and the union members approve the motion in a referendum, the union will secure the legal right to strike.

At Hanwha Ocean, conflicts over negotiations between prime contractors and subcontractors resulting from the implementation of the “Yellow Envelope Act” are becoming a reality. This is because subcontractor unions—including the union of a partner company responsible for catering, commuter buses, and facility management at the Geoje plant—are asserting that Hanwha Ocean, the prime contractor, is the employer and are demanding direct negotiations. As the subcontractor unions have warned of a strike, there is a possibility that the conflict could spill over into the shipyard’s production floor if it drags on.

POSCO, too, stands at a crossroads, facing its first strike since its founding. Following the recent breakdown of wage and collective bargaining negotiations, the POSCO union passed a resolution to engage in industrial action with 92.2% of members voting in favor. The union is demanding a 7.1% increase in base pay, a 600% incentive bonus, and the allocation of 50 shares of employee stock, but a significant gap remains between the union and management. If the Central Labor Relations Commission decides to suspend mediation on the 18th, the union will secure the right to strike.

An industry official stated, “As this is the first round of wage and collective bargaining since the implementation of the ‘Yellow Envelope Act,’ labor-management conflicts—which involve not only compensation for performance and profit-sharing but also the complex, multi-layered relationships between prime contractors and subcontractors—are intensifying.” The official added, “If a strike actually occurs, the repercussions could extend beyond production disruptions to affect partner companies and the entire supply chain.”