In December 2013, South Korea’s Supreme Court ruled that bonuses and other forms of compensation must be included in a worker’s base pay. Now, with higher labor costs looming, General Motors is struggling with profitability concerns.
“The 2014 wage negotiation is going to be the most critical negotiation we’ve ever had with the union,” says CEO of GM Korea, Sergio Rocha, in an interview at the Busan motor show. “I’ll do everything possible and impossible to guarantee that we have a sustainable future. By integrating bonuses and other benefits into the ordinary wage, the labor cost grows substantially. This is not good for GM Korea, this is not good for the industry, and this is not good for Korea Inc.”
Automotive News reports that the Korea Employers Federation has estimated that the court decision will translate into at least $13.5 billion in added annual labor costs for companies. Raising base salaries magnify overall wage costs because they’re used to calculate everything from overtime payments to annual raises, says Rocha.
It’s not only General Motors that is dealing with increased labor costs due to the ruling, as Hyundai Motor Co. and Kia Motors Corp. are battling their unions in court over the issue.
GM Korea exports vehicles (mainly under the Chevrolet banner) to countries such as Australia and Europe.
Comments
Shut ’em down. maybe make them in Australia.
It isn’t necessary to be so drastic as a “shut down”, but GM must begin to move their small car manufacturing to the North American continent and cut down on shipping costs. The Spark and Captiva should be produced where the Sonic is produced. Then the Chevy Spark EV can be produced 100% in America.
Shut them down,who cares!Their cars are rubbish! I am a diehard HOLDEN fan,but when the factory closes in 2017 # the true HOLDEN will be dead.
So true. Unfortunately ALL car companies will be dead in Australia.
Solidarity with the Korean workers is needed in our own interest.
When did you take the last wage cut?
An injury to one is an injury to all.
Put the price of the cars up to allow for wage increases, it’s not like there is a local industry to compete with anymore, they can charge what they like. Reap what you sow Australia