In a Feb. 28 demonstration, GM Korea’s union members demand that the automaker withdraw a plan to shut down a plant. Photo credit: Yonhap via Reuters
SEOUL — Almost 2,500 workers at General Motors’ South Korean unit, equivalent to 15 percent of its staff, have applied for a buyout package that the U.S. automaker is offering as part of a drastic restructuring, union officials said.
The relatively strong number of applicants could make GM’s task of negotiating with the unions and the government somewhat easier, although the automaker still faces many obstacles after saying last month it would close one South Korean plant and was weighing the fate of its three remaining factories.
“It looks the redundancy program has been well received by workers,” said Cho Seong-jae, a senior fellow at the Korea Labor Institute.
“It seems that workers have given up any hope. They are fed up as the Gunsan factory has been underutilised for the past two to three years,” he added.
The number of applicants contrasts with past militant action by unions in South Korea’s auto sector. In 2001, Daewoo Motors laid off 1,750 workers, triggering violent clashes with riot police. Daewoo Motors’ assets were sold to GM the next year.
GM’s South Korean unit, which is geared primarily towards building cars for export and employs some 16,000 people, is expected to have made a fourth straight year of operating losses last year, battered by the automaker’s decision to pull the Chevy brand from Europe in 2013.
A GM document seen by Reuters showed that over the longer term, the automaker aims to cut 5,000 South Korean jobs but keep production steady if Seoul agrees to a $2.8 billion financial aid proposal for the money-losing operation.
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How amenable South Korea’s government will be towards GM’s proposal is unclear. The planned closure of the Gunsan plant is, however, a setback for President Moon Jae-in who has made job creation a key policy goal.
Under the buyout package, which had an application deadline of March 2, workers are being offered three times their annual base salary, money for their children’s college tuition and more than $9,000 towards a new car.
Just ahead of the deadline, GM Korea last week urged workers to take the package, saying this may be the last time such an offer would be made.
“Management scared us. Some workers were concerned that they might be laid off if they didn’t apply,” a union official told Reuters, adding that it was not a bad deal for some workers who were near retirement.
At the Gunsan factory which is due to be shut down, 941 out of some 2,000 workers applied for the redundancy package, union officials said, declining to be identified as the information has not been publicly released.
Cho at the Korea Labor Institute said it would not be easy to relocate the Gunsan workers who did not apply for the package to other factories.
“Workers at other factories may refuse to take in the Gunsan workers, because they also face restructuring pressure,” he said.
In addition to sharply reducing headcount, GM is also seeking concessions on wages and other benefits from the union.
Management plans to hold another round of talks with the union on Wednesday where the two sides may discuss the fate of the workers at the Gunsan plant who did not apply for the package as well as the automaker’s proposals on wages.
The union has come under much pressure to make concessions. South Korea’s auto association added its voice on Friday, arguing that workers’ wages at GM were high.
The South Korean government is expected to start due diligence on GM Korea this week as it weighs whether to spend taxpayer money to rescue the unit.