SEOUL (Reuters) – A $10 billion (6 billion pounds) bid by Hyundai Motor Co and two affiliates for a plot of land in Seoul could delay resolution of perennially contentious wage talks, with auto workers angered by news of the deal striking for a second day on Wednesday.
The Hyundai-led group – which includes sister firms Kia Motors Corp and Hyundai Mobis Co – last week made a record $10 billion bid for land to house a headquarters, hotel and theme park complex, more than triple the property’s appraised amount.
Shares in the three companies have since lost more than 10 percent.
This week’s strike also comes as Hyundai and Kia are planning to build new factories in China and Mexico, closer to export markets and where wages are lower than in South Korea.
“Before the land bid, I expected Hyundai to reach a wage deal this week. But the land bid complicates wage talks,” said Park Tae-ju, a professor at the Employment Labor Training Institute, who previously advised the car company on its two-shift system.
“I expect the talks to drag on longer than expected,” Park said.
Hyundai’s 47,000 union workers in South Korea were on strike a second day on Wednesday over the land deal, while Kia’s union also staged a partial strike.
Workers “are angered by the astronomical amount of money” to be spent on the land in the high-end Gangnam district of Seoul, Kia’s union said.
“Chairman Chung Mong-koo should not be betting the future on land, but investing in people,” Hyundai’s union said in a newsletter.
Hyundai, the world’s fifth-biggest automaker along with its affiliate Kia, has been hit by strikes in all but four years of the union’s 27-year history, although they usually make up losses with extra work later that year.
Recurring labour disputes, high wages at home and strong currency are expected to put further pressure on the automaker to accelerate overseas production. Hyundai made 62 percent of its cars last year overseas, up from 20 percent in 2004.
Since annual wage talks began in early June, Hyundai Motor and union negotiators have wrangled over a new wage calculation, which the company says would sharply increase labour costs.
Hyundai’s domestic employees, excluding executives, earn an average 94 million won ($90,419) per year.
The country’s supreme court ruled last year that regular bonuses should be counted as base wages used to calculate overtime allowances and other benefits, putting pressure on businesses to change their wage schemes to reflect the decision.
“With the currency, land issue and then strike, investors now appear to be exhausted,” said Hong Jin-ho, an auto analyst at IBK Investment Securities.
(Reporting by Hyunjoo Jin; Additional reporting by Chris Lee; Editing by Tom Hogue)
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