GM Korea Union Agrees Last-Minute Cost-Cutting Deal

  • By Kim Seong-min

    April 24, 2018 12:56

    GM Korea's labor union reached an 11th-hour deal with management on Monday over cost-cutting measures, saving the cash-strapped automaker from declaring bankruptcy.

    Under the agreement, management will not impose an unpaid leave of absence on the remaining 680 workers at its Gunsan plant that will be closed while offering another voluntary retirement program.

    Workers will continue to receive subsidies for their children's education but no more payments for their own educational pursuits.  

    GM announced the closure of the Gunsan plant and started a major restructuring program of its Korean unit in February of this year. Some 2,600 workers applied for voluntary retirement packages, while the union agreed to relinquish bonuses and freeze wages this year.

    The agreement has yet to be approved by a union vote later this week.

    "Ratification of the tentative agreement is critical to our viability plan and securing support of the Korean government and our shareholders," GM Korea CEO Kaher Kazem said in a statement. "The labor union has demonstrated its commitment and we continue to work with our other key stakeholders to gain their support."
     
    GM headquarters will in turn inject W500 billion in emergency funds into the Korean unit this month (US$1=W1,075).

    The Korean government also needs to decide on the size of its bailout. State-run Korea Development Bank, GM Korea's second-largest shareholder, will decide whether to provide the automaker with another W500 billion in emergency loans following due diligence. 

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