GM Korea, union reach tentative wage deal

Marco Green
April 23, 2018

In February, GM said it will shut one of its four auto assembly plants in Korea by the end of May, while asking GM Korea workers to make some wage concessions and the Korean government to extend a financial helping hand to put its loss-making Korean unit back on track.

Lee's latest comment calling the union to come on board was made in a meeting with GM Executive Vice President Barry Engle, GM Korea CEO Kaher Kazem, and Rep. Hong Young-pyo of the ruling Democratic Party at GM Korea's Bupyeong factory in Incheon on Saturday.

The company has previously offered last Friday as a deadline for GM Korea's bankruptcy filing.

The deal would pave the way for the Korea Development Bank (KDB) to provide support and for GM to allocate new models to South Korea to help turn around GM Korea, the unit said in a statement.

The KDB is GM Korea's second-largest shareholder with a 17.02 percent stake.

Essentially, GM Korea has a choice between bankruptcy and restructuring.

GM announced on February 13 that it would close down its assembly plant in Gunsan, North Jeolla Province with the loss of over 2,500 jobs, and demanded a massive government bailout to keep the other two plants here open. The company needs to get financial support from the Korean government. The status of the report could not be immediately ascertained.

The two sides also agreed on a set of restructuring measures, including wage freeze, no bonuses and the suspension of some work benefits.

Future base wage increases and performance pay "will be dependent upon the company regaining profitability", while the base wage rises will not exceed inflation, according to the agreement seen by Reuters.

The two parties agreed to work toward resolving that issue by sending them to other plants and encouraging other workers to voluntarily leave GM.

The union will vote on the deal later this week.

Over the past three years, GM has sought to focus on profitable markets, mainly the United States and China, and new technologies such as electric and automated vehicles. The operation has been hemorrhaging money for years-demand is down largely thanks to GM having withdrawn the Chevrolet brand from Europe. It posted a net loss of $1.1 billion in 2017, its fourth straight year in the red.

Other reports by Click Lancashire

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