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Members of the GM Korea branch of the Korea Metalworkers Union demonstrate outside the company’s factory in Gunsan

On Mar. 15, the labor union at GM Korea announced that it would not ask for a bonus for last year or a raise in wages this year. By giving up a bonus of 10 million won (US$9,300) that is typically paid each year, the union has basically accepted a pay cut. Since the company’s key demands have been a freeze on the base salary and on promotions for office staff and non-payment of the bonus, the upcoming negotiations between labor and management are expected to shift into high gear.

“Provided that the company reverses its plan to close the Gunsan factory, unveils a long-term development plan for GM Korea [including a new model of car], agrees to guarantee employment and livelihood for union members, releases the results of the Korea Development Bank’s due diligence and takes responsibility for the results of that due diligence, we will not ask for the payment of the bonus for 2017 or for a pay raise for 2018,” the GM Korea branch of the Korean Metal Workers’ Union decided in an extraordinary meeting of delegates held on Mar. 15.

The union stipulated 21 conditions for the long-term development plan, including the release of a roadmap for assigning a new car; the domestic development and manufacture of future-oriented vehicles, including electric cars and self-driving cars; an agreement for a due diligence inspection of corporate management to be jointly carried out by management and labor; and organizational restructuring and a reduction of the number of executives.

This is the first time the GM Korea branch of the Korean Metal Workers’ Union has not abided by the plan for a wage increase previously decided by the union. A meeting of union delegates on Mar. 12 adopted a plan to ask for a wage increase of 5.3% this year at GM Korea, Hyundai Motor Company and Kia Motors.

The right to employment and livelihood and the other conditions that the union has placed on accepting the pay cut are not expected to act as a major obstacle during the upcoming negotiations. For one thing, GM Korea has much less need, and therefore less of an excuse, for ramming through an artificial layoff that would jeopardize employment. The union’s concessions are roughly equivalent to the 500 billion won (US$466.7 million) in savings on personnel costs (the amount of the company’s yearly operating deficit) that the company hoped to achieve through voluntary retirement and collective wage bargaining with the union.

The 2,500 people who have already agreed to retire are estimated to have helped the company save 400 billion won (US$373.4 million) in personnel costs, while the union’s decision will help it save at least 140 billion won more (US$130.7 million; calculated by multiplying the bonus of 10 million won by the 14,000 workers who remain after the voluntary retirement program).

As for the union’s demand for the company to retract its plans to close the Gunsan factory, the ultimate solution is likely to be found through deliberations between labor and management about reassigning Gunsan workers to factories in Bupyeong and Changwon. But if the company does not content itself with the wage freeze and non-payment of the bonus and instead keeps pushing to end the payment of “welfare points” during major holidays, such as Chuseok (Thanksgiving) and the Lunar New Year, charge money for lunches at company cafeterias, raise the fee for company shuttles and reduce educational subsidies for employees’ children, the union is likely to take a firmer stance.

Thanks to the union’s confirmation of its demands for the negotiations, labor and management at GM Korea are basically in agreement on the big picture of freezing wages and cancelling the bonus payment. This suggests that the ball is now in the court of the GM headquarters in Detroit, which has the authority to decide where new models of cars will be produced.

“The workers at GM Korea have not once asked for payment above and beyond the work they have done, nor have they received such payment. The reason the union is making such agonizing concessions and sacrifices is to protect the employment and livelihood of the 300,000 workers [employed at suppliers],” a union spokesperson said in a press conference held after the meeting of delegates.

By Choi Ha-yan, staff reporter

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