Hyundai, union tentatively agree on wage increases

Hyundai Motor Co., South Korea's largest automaker, and its workers union reached a tentative agreement on a wage increase for this year, averting a strike.

Workers' monthly base salary will be increased by 4.9 percent, or 79,000 won ($66), Hyundai and the union said in separate statements late yesterday. They also agreed on a bonus equal to three months' pay plus 5 million won in cash and a distribution of 30 shares for each worker. The pay deal needs union members' approval in a vote, which is planned for tomorrow.

If the agreement is approved, Seoul-based Hyundai would avoid a strike for the second straight year, the first time that has happened since the union's foundation in 1987. Union leader Lee Kyung Hoon, elected last year, is considered more moderate than his predecessors.

"Avoiding a strike for two straight years may pave the way for a stable management-labor relationship," said Ahn Sang Jun, an analyst at Tong Yang Securities Inc. in Seoul.

Hyundai rose 0.4 percent to 137,500 won at 9:16 a.m. in Seoul trading, while the benchmark Kospi index declined 0.1 percent.

Hyundai's union, the country's largest by membership with about 45,000 employees, staged a strike every year except two until last year, costing the company a combined 11.6 trillion won from 1987 to 2008 because of lost production, according to a company estimate.

The agreement with South Korean workers follows declining sales and share in Hyundai's domestic market. The carmaker's sales in the nation fell 35 percent in June, reducing its market share to 40 percent from 52 percent a year earlier.

"The company and union could reach a win-win agreement through concessions amid an adverse business environment such as falling local market share and southern Europe's debt crisis," Hyundai said in its statement.