Hyundai Heavy Industries (HHI), the world’s largest shipbuilder, could face difficult wage bargaining this year after its labor union requested its highest pay raise in the past 12 years.
Through its in-house paper, the union revealed its annual wage increase proposal of 132,013 won ($126.94) on its monthly base pay. It is the largest wage increase request since 2002 when the union asked for a 138,912 won hike.
The proposal is a big hike compared with recent years. In 2012, the union asked for 111,231 more won, and last year it wanted 91,221 won.
The union has also proposed a performance bonus of 250 percent from base pay; a holiday bonus of 100 percent from base pay to be paid in June; and it wants 5 percent of the company’s net profit to be placed in an employee welfare fund.
These proposals are expected to be confirmed at today’s meeting of labor union executives and delivered to management next week. The company’s wage negotiations start in the middle of next month.
“We don’t know how this year’s negotiations will turn out as the final proposal from the union has not been confirmed yet,” a spokesman for HHI said.
HHI is concerned that the result of bargaining will affect the wage negotiations of its affiliates, such as Hyundai Mipo Dockyard and Hyundai Samho Heavy Industries. Although the labor unions are different, the executive members from all three companies discuss labor issues together.
Just like at other Korean companies, HHI is expected to negotiate a base salary increase, which has been a major issue in the industry after a local court ruled that regular bonuses should be included as part of base pay.
HHI has expected difficult wage negotiations after a new union leader known for his militant style, Chung Byung-mo, was elected last October. Industry insiders said that HHI has previously been led by moderate union leaders, but in recent years, employees have not been satisfied with their wage-bargaining results.
HHI said that the union’s timing in asking for extensive wage hikes is not appropriate as the company is trying to recover from a slump. The shipbuilding conglomerate last year saw its operating profit plunge 60 percent to 2 trillion won, while net profit dove 85.8 percent to 1.02 trillion won.
According to a report from Woori Investment and Securities, HHI’s first-quarter performance this year is expected to be around 73 billion won, down 80.6 percent from a year ago.
“The profits from shipbuilding and refinery must be improved,” said Yoo Jae-hoon, an analyst at Woori Investment and Securities, in his report.
