hankyoreh

The union of Ssangyong Motor launched a full-scale strike a few days ago in response to the management’s plans for large-scale layoffs. For the automaker, which is suffering serious financial difficulties with the global economic crisis, extraordinary measures may be inevitable. However, the solution does not lie in mass layoffs, which places all of the suffering onto the workers. Not only labor and management, but the government as well, must actively put their heads together to come up with a recovery plan where they each share some of the pain.

The situation at Ssangyong Motor presents a case whose significance goes beyond the labor-management issues of a single company. China’s Shanghai Automotive Industry Corporation (SAIC) is a majority shareholder, but given the importance of the automotive industry in South Korea and its effects on local economies, this is not a situation where the government can stand idly by. Far greater social and economic costs will be paid if it leaves everything for the creditors and majority shareholders to handle and then tries to pick up the pieces after the situation hits rock bottom.
Diplomatic efforts from the South Korean government are particularly needed to enable the SAIC to play an active role in Ssangyong Motor’s recovery.

The management must begin a frank dialogue with the union as well. To date, the union has presented the management with various plans for operational normalization. As an example, they have suggested that they can shoulder the 100 billion Won in R&D costs for new models and provide a total of 1.2 billion Won for an employment security fund. However, the management has reportedly continued to avoid any proper bargaining and some experts say this may be because they judged the plans to be unrealistic. Nonetheless, they should not be rejecting dialogue with the union out of hand. The more difficult the situation, the less chances the company has of recovery without the union’s cooperation.

The situation of the union, which feels no choice but to engage in a “last-ditch strike” since their dialogue channels are blocked, is understandable. However, they must do their best to avoid letting this situation turn into a catastrophe. It was clearly wrong for the company to announce layoffs of more than 2,400 people, close to half of the production positions, but it is also a reality that it will be difficult to realize a way out of this difficult situation without some workforce restructuring. An analysis that holds Ssangyong Motor’s value, if maintained, is greater than its liquidation value is predicated on restructuring and new funding support. The union needs to maintain a flexible position of carrying on discussions with the management about alternative plans that will minimize the number of workers laid off through a variety of methods that may include decreasing working hours.

The world’s automakers are now waging a fierce battle needed to survive the economic crisis. The moment one of them loses its competitive edge, it will get swallowed up by another company or disappear completely. Ssangyong Motor is no exception to this rule, but it cannot survive by demanding that all sacrifices come from the workers, as it is doing now. There needs to be serious discussions of a survival plan that involves labor, management and the government all taking a step back and agreeing to share some of the pain. They should begin immediately with dialogue.

Please direct questions or comments to [englishhani@hani.co.kr]