Confrontation between GM Korea and labor union continues

GM Korea and its labor union failed to reach an agreement on Thursday, a day before the deadline of dispute settlement proposed by GM as a prerequisite for a new cars allocation to South Korea. GM Korea holds the stance that it cannot pay out the scheduled bonuses in early April without striking a deal on the wage and collective agreement between labor and management. The trade union is up in arms, claiming that the state-run Korea Development Bank (KDB) is putting pressure on the union.

Both sides also failed to hash out their wage negotiations even on the same day, a day before the “Day of Reckoning.” Instead, the labor union held a press in front of KDB’s main branch in Yeouido, Seoul, and claimed, “KDB is backing GM Korea, which is threatening the labor union with the prospect of bankruptcy, and the bank is even meddling in the collective wage agreement. The bank is manipulating the agreement behind-the-scenes, and further pressuring to cut wages.”

“I thought the bank and the government were on our side, but they are in cahoots with the company,” said an official of the union, adding that he felt betrayed and decided to fight.

GM has stressed the need to clench a deal on the wages negotiation by Friday as a condition for allocation of new cars and financial aid to GM Korea. The management is requesting to reach a tentative agreement to cut annual welfare costs by around 100 billion won, and the labor is adamant to maintain the terms they initially proposed for negotiation. GM Korea and the labor union will reopen their negotiation for the 7th round at 10:00 a.m. on Friday.

GM Korea President Kaher Kazem sent a letter of plea Wednesday to his employees to stress the need to reach an agreement on the wage and collective negotiation in order to show their will to keep the company’s sustainability to GM headquarters and the government. “If we fail to reach an agreement by the end of March, it would be impossible to secure the funds to pay for the various expenses, and in turn, it would make it impossible to provide the lump sum and allowances promised to be paid out on April 6,” added the president of GM Korea in the letter.

Without finalizing the wages agreement by the end of this month, the plan to produce 500,000 units of new cars will also likely to be scuttled. “If a failure to strike a deal on the wages agreement leads to adjustments of the headquarters’ aid plan to GM Korea, the due diligence currently conducted by KDB and the aid plan for GM Korea could be started again from scratch,” said an official from GM Korea.


bjk@donga.com