KIA Autoland Gwangmyeong (Image courtesy of Yonhap)
SEOUL, Oct. 19 (Korea Bizwire) – Kia’s labor and management recently reached a preliminary agreement on wages, and it includes an unusually large compensation package. What happened is that the labor union successfully used the “employment inheritance” issue as leverage.
In simpler terms, they got significant compensation in exchange for removing a clause that should have been removed a while ago from their collective agreement.
However, with the intense competition in the global electric vehicle market, some observers have suggested that money that could have been used to improve Kia’s electric vehicle competitiveness was spent on getting rid of this clause.
The new agreement represents the third consecutive year that Kia and its labor union have settled on wages without any major disputes. One of the main changes in this agreement is the removal of a clause called the “employment succession clause.”
This clause prioritized hiring retirees and the children of long-term employees with over 25 years of service.
In return for giving up this clause, the union secured a remarkable compensation package, which includes a significant base salary increase, a generous management performance bonus, incentives for achieving production and sales goals, a special bonus, a gift certificate for a traditional market, and substantial stock awards. Both the base salary and performance pay are the highest they’ve ever been.
A major point of contention during these negotiations was the employment succession clause, which had been criticized as a form of job inheritance. Kia had been asked to remove this clause since 2014, and even the Ministry of Employment and Labor ordered its removal in February, citing it as a violation of employment equality laws. Despite this, the union resisted, and the government took legal action.
In the current round of negotiations, the union continued to reject the company’s request to eliminate the employment inheritance clause.
It’s worth noting that employment prospects for young people are challenging, with a significant decrease in employment for those in their 20s, and a high number of job seekers.
Many consider employment inheritance as unfair and a hindrance to the hopes of young job seekers. They see it as frustrating that the Kia union managed to secure a substantial compensation package by holding onto this clause.
Kevin Lee (kevinlee@koreabizwire.com)
