Renault Samsung Workers OK Pay Freeze, Unpaid Holidays

Workers at beleaguered Renault Samsung accept a wage freeze and 18 unpaid days off for the 2012-2013 contract period.

Friday’s vote was close, with 51.5% of the workers voting to ratify the new deal, but it ends a 6-month string of collective-bargaining sessions that began in January.

In recent weeks the outlook was dismal, with the union calling for four partial strikes of four hours each by its 1,800 workers across both the day and afternoon shifts.

The unexpected compromise by the workers’ union came when both sides publicly acknowledged this week that the auto maker was in very difficult straits and both sides were working for its survival.

Renault Samsung volumes have nosedived month after month this year, lowering its ranking to No.5 in sales in Korea, behind even troubled Ssangyong.

Conversely, for the past three months Ssangyong’s sales have been building, while Renault Samsung did not attain even half of its 6-month domestic sales target.

With the new accord, Renault Samsung workers are giving up much, in sharp contrast to the demands other units of the Korea Metal Workers Union are putting on other auto makers.

According to Renault Samsung spokesman Jason Koh, the agreement freezes base wages for the duration of the contract and provides workers with a one-time personal incentive bonus of just 500,000 won ($440).

The workers also agree to take 18 unpaid holidays, Koh says. The holidays will take place when the Busan plant is shut down for model makeovers or other reasons.

For its part, Renault Samsung promises to invest 10 billion won ($8.9 million) to “upgrade and stabilize” the plant, according to Koh.

The auto maker also pledges to maintain its present work schedule of two 8-hour shifts.

The Renault Samsung branch of the metal workers union has about 1,800 members, roughly 95% of Busan plant employees.

The workforce is smaller than that of Ssangyong, after Renault Samsung shed some 800 employees last year through a voluntary retirement program.

Koh acknowledges that RSM failed to reach less than half of its 6-month domestic sales target, which was set at 65,000 vehicles.

Renault Samsung sold just 26,309 vehicles in the January-June period, less than half of its 6-month domestic-sales goal of 65,000 units. Koh says no target was set for export sales.

The 65,000-unit domestic target now applies for the full year.

Even with sales skidding badly, the four partial strikes hit lean inventories hard and it may be necessary to schedule some night and weekend overtime work to keep up with even the weak demand.

Including 32,396 exports, total sales for the six months were down 28.3% to 58,705 units. Exports saved the situation from being even worse, with demand building strongly in China, followed by Russia.

“We launch sales of both the SM3 EV (small electric vehicle) and the QM3 (cross/utility vehicle) in the second half,” Koh says. The new models should boost deliveries and put more product into the assembly plant, he notes.

The QM3 is being imported from a Renault factory in Spain, but the SM3 will be built at the Busan plant. Koh does not offer details of the EV’s drivetrain or power source.