Hyundai Motors Hikes Employee Wages

Following in the footsteps of Maruti Suzuki, Hyundai India has recently signed its wage settlement agreement, increasing the employee wages by as much as 40% for for the first year followed by another 30% in the next two years. The increase ranges from Rs. 11,000 to Rs. 13,000 excluding components like variable dearness allowance and welfare benefits.

This Hyundai India settlement with the United Union of Hyundai Employees (UUHE) will come into effect from the 1st of April, 2012 and will remain so until 31st March, 2015. V G Ramakrishnan, managing director, Frost & Sullivan South Asia revealed, "The significant increase is more of responding to the market pressure, pressure from labour unions and off course inflationary environment. This increase covers an average inflation of 7-8% every year, but also gives them incentive to improve productivity."

Rajeev Dubey, National President of the Employers' Federation of India (EFI) also had a few words to say on the effects this would have on Hyundai’s costs. "All units will have to balance the need to be competitive, yet be fair to its employees. The exact increase will vary from unit to unit. But it is a difficult balancing act, which companies will have to strive to maintain." While experts maintain this decision could raise the company’s overall costs by as much as 5-8%, in the long run, it may turn into a profitable decision for Hyundai.

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