Seoul: Kia Corp. and its union have reached a tentative agreement on a wage deal for 2025, as concerns mount over U.S. import tariffs, the company announced on Thursday. The agreement comes as both parties aim to navigate the challenges posed by these tariffs and boost future competitiveness.
According to Yonhap News Agency, Kia's 26,000-member union has accepted the company's proposals, which include a 100,000 won (US$71) increase in basic monthly pay, 4 1/2 months of performance-based bonuses, a cash payment of 15.8 million won, 200,000 won in gift certificates per worker, and 53 Kia shares. Additionally, the company plans to hire 500 engineers for its production lines by the end of next year.
The agreement also involves a commitment to transforming Kia's domestic plants into core production facilities for next-generation models, such as purpose-built vehicles. A Kia official stated that the deal was reached to address the challenges posed by high U.S. tariffs on imported vehicles and to ensure future competitiveness.
This marks the fifth consecutive year that Kia and its union have reached a wage agreement without resorting to strikes. The tentative agreement is set to be voted on by the union members on Tuesday.
Amid these negotiations, a framework agreement was reached between Seoul and Washington on July 30. The United States agreed to lower "reciprocal" tariffs on Korean products and reduce auto tariffs to 15 percent from 25 percent, contingent on Korea's commitment to invest US$350 billion in the U.S. However, the auto tariffs are yet to be lowered.
In related developments, unionized workers at Hyundai Motor Co., Kia's larger affiliate, recently accepted the company's wage proposals, which include similar wage increases and bonuses. Hyundai and Kia have both experienced declines in net profit due to steep U.S. tariffs and a slowdown in demand for electric vehicles. Hyundai's net profit dropped 12 percent on-year to 6.63 trillion won in the first half, while Kia's profit fell 19 percent to 4.66 trillion won.