General Motors Korea and the local labor union have restarted talks over wages and benefits ahead of some big decision GM must make. In the coming weeks, GM will decide the fate of its Korean operations and potentially exit the country altogether; the automaker already announced it will close the Gunsan plant in May.
Reuters reported on Tuesday that GM Korea has proposed a base wage freeze and no bonuses this year. GM Korea also wants to freeze other benefits such as tuition for employees’ children. The proposal will likely be met with opposition from the labor union as the current South Korean administration’s senior vice policy chief, Hong Ihkpyo, blasted GM’s “failed global management.”
However, a researcher at the Korea Institute for Industrial Economics & Trade, Lee Hang-koo, said it’s unlikely the union will turn militant. Without concessions, it’s quite likely GM Korea’s remaining three factories will be at risk.
GM has also been working with the South Korean government to co-invest in the automaker’s future, specifically, with a $2.8 billion investment that would secure the automaker’s future for 10 years. GM has also proposed a debt-to-equity swap.
South Korea has appointed a third-party accountant to conduct its due diligence before giving a final decision on government support.