HD Hyundai Heavy Industries has been criticized for revising its wage system for foreign workers. South Korean labor groups argue that the company’s move effectively cuts the basic wages of foreign workers and pressures employees into accepting unfavorable contract terms.
According to South Korean media, the dispute involves more than 1,600 foreign workers (hereinafter referred to as “such employees”) directly employed by HD Hyundai Heavy Industries holding E-7-3 skilled worker visas. The company proposed revised employment contracts to such employees in May of this year.
Under the adjusted wage framework: the monthly basic wage and fixed allowances for such employees have been reduced by hundreds of thousands of Korean won; a new fixed overtime allowance of approximately 400,000 Korean won (about 1,772 RMB) has been added, based on a requirement of 30 hours of overtime per month; a performance-based wage differentiation mechanism has been introduced; and the previously deducted meal fees from wages have been replaced with three free meals per day.
HD Hyundai Heavy Industries stated that when including the overtime allowance, the monthly salary of such employees would increase by more than 200,000 Korean won (about 886 RMB).
The report points out that despite HD Hyundai Heavy Industries’ explanations, a large number of foreign workers opposed the company’s reduction of basic wages and institutionalization of overtime, and refused to sign the revised employment contracts. However, after the company slightly increased the monthly basic wage, 98.1% of workers eventually agreed and completed the signing.
Nevertheless, regarding the 98.1% contract signing rate, activists from South Korean labor groups believe that such a high signing rate does not reflect the workers’ genuine voluntary consent. The report states that the Foreign Workers Support Center received recordings allegedly showing company managers warning workers that failing to sign the contract could jeopardize contract renewals and visa approvals, potentially leading to their forced repatriation to their home countries.
South Korean labor unions and labor lawyers argue that if such statements are credible, it means the employer exploited the vulnerable position of foreign workers to exert pressure; linking contract renewal to acceptance of the revised employment contract may constitute illegal coercion under South Korean labor law and criminal law.
HD Hyundai Heavy Industries has fully denied the allegations made by South Korean labor groups and stated that the revision of the wage system aims to eliminate wage disparities among foreign workers hired at different times, providing a fairer and more transparent wage system.
HD Hyundai Heavy Industries explained: “Although the monthly basic wage of foreign workers has been adjusted, the cancellation of meal fee deductions and the addition of new wage components are intended to increase workers’ actual take-home pay… Foreign workers can voluntarily choose whether to adopt the revised employment contract, and the company expresses regret over ‘individual inappropriate remarks’ made during the explanation process. The company will take corrective measures against managers and provide further guidance.”
