Compromise reached in monthlong Hyundai labor disputeAugust 24, 1998
Web posted at: 1:32 a.m. EDT (0532 GMT)
ULSAN, South Korea (CNN) -- Management and union officials of strike-bound Hyundai Motor Co. reached a compromise Monday, ending a 36-day labor dispute at the nation's largest automaker.
The compromise allowing "a minimum level of layoffs" was reached at dawn after four days of marathon talks. The breakthrough in the government-mediated negotiations came when both sides agreed on terms of the layoffs in overnight talks.
Hyundai's 26,000 union workers walked off their jobs July 20 in protest of the company's plan to lay off 1,538 workers. Hyundai had shed 6,100 jobs earlier this year through early retirements.
Under the agreement, Hyundai's management said it would reduce the number of workers to be laid off to 277 from a previous offer of 460, a figure proposed by mediators which the union accepted on Friday. The remaining 1,261 were put on 1 1/2 years of unpaid leave.
"The past one month was truly agonizing. I hope this will be an opportunity for both labor and management to live together peacefully," union leader Kim Kwang-shik told a news conference.
Labor Minister Lee Ki-ho, who led the last-minute mediations, praised the compromise, calling it "a great victory achieved through dialogue and concessions."
Critics say deal is too pro-labor
The compromise raised questions about South Korea's ability to ensure a flexible labor market, a key to wooing back much-needed international investment. It was criticized by some as being too pro-labor.
"It's very bad for Hyundai, for corporate restructuring and for South Korea's ability to get overseas financing," said Steve Marvin, head of research at Jardine Fleming Securities.
Major business organizations, including the Korea Managers' Federation, blasted the government, accusing it of siding with the union because of the political risks involved in using police force to break up strikes.
"The legally guaranteed layoffs have failed in the case of Hyundai. This has set a bad precedent and will negatively affect other businesses," said Kim Young-bae, a managing director of the federation.
Meanwhile, witnesses said up to 2,000 hardline union members were barricaded inside the Hyundai plant in Ulsan, shouting at other workers and burning their union work vests in anger.
Layoffs with enhanced severance
The 277 workers to be laid off will be given enhanced severance payments and chances to be rehired by Hyundai Motor or other Hyundai subsidiaries, negotiators said in a joint statement.
The company also agreed to contribute 5 billion won, or $3.8 million, to the workers' welfare fund.
The last sticking point was a demand by the union that the company drop lawsuits against 64 union leaders responsible for the strike. The company accepted the demand on the condition that the union "does its best to normalize plant operations."
Hyundai Motor, a key subsidiary of the giant Hyundai group, was the first major business to shed redundant workers. Observers saw Hyundai as a test of South Korea's will to keep its promise to ensure a flexible labor market.
Government mediators intervened after talks between union and management stalled. The government ruled the Hyundai strike illegal but withheld the use of police force to end it because of its negative impact.
Hyundai said the strike cost it $695 million in lost production, or more than 100,000 unproduced vehicles. Its parts suppliers were believed to have suffered $566 million in lost production, it said.
Back to the top
© 2000 Cable News Network. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines.