Hyundai's Employment Relations at a Crossroad: Engineers' Skill Formation and the Development of the Internal Labor Market

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Abstract:

Hyundai Motor Company (hereafter HMC) is known for remarkably successful growth rate it demonstrated during the last several decades. HMC yet also sets a notorious case of hostile labor relations between the management and the workers. How has HMC been successfully growing despite its hostile labor relations?

This paper aims to explain the driving force of HMC in terms of skill formation. Under the hostile labor relations Hyundai has developed a production system that is less dependent on the skills of production workers under the hostile labor relations. On the other hand, HMC has been utilizing the high skill of engineers to supplement the low skill of production workers. Engineers’ high skill is a major factor that has contributed to the competitiveness of HMC, based on the development of its internal labor market.

This paper is composed of three parts. First part explains the rift between production workers and engineers in HMC since the establishment of the labor union in the late 1980s. Second part explains the skill formation of engineers, based on the development of the internal labor market in HMC. Third part explains how the high skill of engineers has been supplementing the low skill of production workers in HMC.