South Korea's umbrella trade association on Sunday urged an end to the strike at Hyundai Motor Co. (KSE:005380), saying that it is having an adverse effect on the economy.

"Hyundai accounts for 4.6 per cent of the country's total exports and 40 per cent of autos shipped abroad," the statement issued by the Korea International Trade Association (KITA) said. It said the automaker's union has staged a strike every year since 1987 and that it called for work stoppages 12 times last year.

"Unfavorable foreign exchange rates are causing South Korean automakers to lose market share in key export destinations," the trade organization said.

KITA claimed that while union workers are demanding year-end bonuses that are equivalent to 150 per cent of their monthly salaries, this is excessive in light of the overall performance for 2006.

"Bonuses should be paid depending on performance," the statement said.

Unionists said last week that they would stage a strike following a decision by management to slash year-end bonuses by a third. Hyundai said it would pay each employee 100 per cent of his or her monthly salary, because the workers failed to meet production targets last year. The bonus cut was in line with an agreement with the union, management said.

The standoff is the latest setback for the world's sixth-largest automaker, which seeks to become a major global automaking player through increased production.

The union however rejected the company's view and argued that the decision to cut bonuses was made unilaterally by Hyundai's executives to hide their management failure. The union accused Hyundai Vice Chairman Kim Dong-jin and President Yoon Yeo-cheol of receiving stock options as year-end bonuses while cutting bonuses for employees.

Meanwhile, Hyundai management said Sunday that it can hold informal talks with union leaders to resolve the issue.

"Executives are open to holding discussions with union leaders, but the nature of the talks will not be supplementary labor-management talks that deal with wages or bonuses," said a company spokesman.

He said that the current strike is illegal and the company will take legal action for any damages incurred. The managers added that continuing with the strike will be detrimental to all parties.