HD Hyundai Heavy union secures strike rights as profit-sharing demand spreads across shipbuilding sector

The union at HD Hyundai Heavy Industries has become the first in the shipbuilding sector to secure the legal right to strike, setting the stage for an intensifying standoff between labor and management over bonus payouts and other demands. The union has been calling for at least 30 percent of operating profit to be distributed to workers as performance pay.

According to industry sources, the National Labor Relations Commission on Monday halted mediation in the ongoing wage and collective bargaining talks between HD Hyundai Heavy Industries and its union. The union had filed for labor dispute mediation on Aug. 14. The commission concluded at its second mediation session that the two sides remained too far apart to bridge the gap. Labor and management have held 15 rounds of talks since their opening session on June 2 and convened a first mediation session on Thursday, but have yet to reach an agreement.

The union will conduct a strike authorization vote among its roughly 8,000 members at the Ulsan headquarters and other locations from 6:30 a.m. Tuesday through 1:30 p.m. Saturday. If a majority votes in favor, the union will have the legal right to strike. No strike vote at Hyundai Heavy Industries has ever been defeated, and observers say passage is likely this time as well.

The union's demands include a monthly base pay increase of 149,600 won ($108), separate from seniority-based raises, a 100 percent increase in bonuses, a share of at least 30 percent of operating profit as performance pay, the inclusion of vacation pay and congratulatory allowances in ordinary wages, and new hiring. HD Hyundai Heavy Industries posted operating profit of 2.04 trillion won last year. A simple calculation of 30 percent of that figure would exceed 610 billion won. The union argues that workers deserve compensation reflecting the industry's boom, while management contends that future cost burdens and investment needs must be taken into account — a gap that shows no sign of narrowing.

Management has not yet put a wage proposal on the table since the opening session and is expected to do so once the union secures strike authorization. Separately from the strike procedure, the two sides are scheduled to hold a 16th round of full negotiations at the Ulsan headquarters on Tuesday. In a union newsletter, the labor side argued that "talking about crisis in the face of a shipbuilding boom is no way to persuade our members," adding that "fixed pay increases, an upward leveling of benefits, and a performance share of at least 30 percent of operating profit must be secured to rebuild broken trust and deliver a stable workplace."

The two sides clashed sharply during last year's wage talks — with high-altitude sit-in protests, physical confrontations and a general strike — but have managed to reach an agreement within the calendar year for four consecutive years since 2022. Last year's deal came after four general strikes and 11 partial strikes by the union.

With South Korea's largest shipbuilder now on the verge of a strike, tension is rising across the industry. The debate over so-called "N% performance bonuses" — a formula that originated in the semiconductor sector — is spreading, and other shipbuilders are seen as likely to face similar pressure.

The union at HD Hyundai Samho is already demanding performance pay equivalent to about 30 percent of operating profit, and the unions at Hanwha Ocean and Samsung Heavy Industries' labor council are also expected to push for larger base pay increases and expanded bonuses and performance pay. Within the HD Hyundai group, unions at HD Hyundai Electric and HD Construction Equipment are also pursuing dispute procedures.

Some observers warn that a prolonged labor dispute could disrupt second-half production and set back the industry's emerging growth engines — including autonomous navigation, data center vessels, eco-friendly ships and the Korea-US shipbuilding cooperation MASGA project.

The business community has long maintained that performance bonuses are not a subject for collective bargaining, arguing that they do not constitute wages under the Labor Standards Act and that decisions on how to allocate operating profit fall within management's exclusive authority. But as more unions succeed in securing strike rights over the issue, performance pay demands are increasingly becoming a central item on the collective bargaining agenda. The enactment of the so-called Yellow Envelope Act — the revised Trade Union Act — has also raised the prospect of simultaneous strikes by primary contractors and subcontractors.