GM Korea Workers Vote on New Wage Pact

Unionized workers at GM Korea will decide the fate of a new tentative wage agreement over the next two days.

Voting is being held at plants in Bupyeong, Incheon, Gunsan and Changwon Sept.8-9 and the result should be available by evening of the second day.

The package is better than the tentative deal rejected by Hyundai workers last month.

The GM Korea pact calls for an 80,000 won ($73) average monthly wage increase, a lump-sum 6.5 million won ($6,000) incentive bonus payable when a new contract is signed and a 4.5 million won ($4,100) performance-based bonus payable at year-end.

A significant breakthrough was achieved in working hours and a new pay system. Both sides agreed that beginning in June 2018, the present 9-hour afternoon shift system will be changed to an 8-hour system, on par with the earlier shift. Significantly, all workers also would convert from an hourly paid system to a monthly salary system at that time.

An “8+8 shift and monthly pay steering committee will be formed to achieve this goal,” a spokesman says. Implementation on June 1, 2018 will be conditioned on attaining union-management agreement on wage compensation, production volumes and production capacity by the third quarter of 2017, he says.

Getting to the tentative agreement has been tough, company sources say. Talks began April 26, with 30 full negotiating rounds held over more than four months until the tentative deal was reached Sept. 6.

Beginning Aug. 11, the union began holding partial strikes that ranged from two to four hours per shift. The strikes were held on 14 separate days and caused production losses of 15,000 vehicles, a spokesman tells WardAuto.

“The effect of the strikes caused our sales to decline in August,” the spokesman adds.

GM Korea’s August domestic sales dipped 11.1% month-over-month and 8% year-on-year to 12,773 units, although sales were bolstered by a strong performance from the high-volume Spark small car (5,000 units) that is produced at Changwon.

Sales of the previously hot-selling Malibu, built in Bupyeong, dropped 40% from July to 2,777 units, although it reportedly has back orders for more than 6,000 units.

Despite the August hit, GM Korea sales are up 17% year-to-date to 113,912, reflecting hot performance before the partial strikes set in.

Things looked dire a week ago when President and CEO James Kim sent employees a letter pleading with them to end the partial strikes. He noted GM Korea had posted record first-half sales and warned the outlook for the last half of the year was unlikely to be as strong due to a softening economy and stiff competition from a bevy of new models.

The Korea Times published a scathing editorial the day GM Korea announced the tentative agreement. “GM is no longer a charity as it was a decade ago, but a multinational firm that is ready to leave if it doesn’t make money,” the newspaper said. “Its recent record also backs it up. Then, the union should realize that it has as much at stake as its CEO does in making the company work better.”

The tentative deal was reached just days before the entire GM Korea workforce, and virtually all of Korea, goes on the annual Chuseok holiday. GM Korea workers will be off from Sept. 14-19.

Meanwhile, Hyundai says it wrapped up the 23rd  round of negotiations Sept. 7 without making progress. Talks will not resume until after the Chuseok holiday, sources say.