Hyundai Motor, the largest South Korean automaker and the fifth-biggest globally when considered with affiliate Kia Motors, is mulling a reshape of its base wages in a bid to lower the surging internal labor expenses.
The bid to curb the rising wage costs would have the company change its existing salary scheme from one based on seniority to merit, though overhauling the decades-old system might clash with the views of the automaker’s highly active labor union. With economic growth on a descent and South Korea being the planet’s fastest ageing crucial economy, the associated increase in labor costs are further eroding the producers’ competitiveness. Naturally, if Hyundai – one of the biggest companies in the country – successfully changes its pay scheme, other major firms are likely to follow swiftly with similar revamps. That would increase the already rapid move away from the wage system traditional in the country that is also based on years of quick economic growth and a culture that holds dear to its seniors.
According to Reuters, Hyundai Chief Executive Officer Yoon Gap-han has recently addressed the matter in a letter sent to workers, announcing the company’s intention to make the fundamental changes. “Our wages have reached a critical limit as a manufacturing company,” commented the executive. “I am concerned that Hyundai may face a situation where it is impossible to produce vehicles at domestic factories anymore.” The Hyundai Group, the country’s second biggest conglomerate, counts on Hyundai Motor as its top-of the line company – its senior workers earn as much as twice as junior ones when counting the same labor and overall they are all better rewarded than colleagues around the world, including in the United States.