As the local South Korean unit of General Motors already has to come up with a solution to dwindling exports for the Chevrolet brand, which is being pulled out of Europe, nother problem arises – the wage talks.
GM’s local boss goes as far as to say that within the current situation of the country – where the local won climb dents export profits – would be influenced by the local labor costs, which could go up as much as 15% – adding to the concerns about further investments in the country.
“The 2014 wage negotiation is going to be the most critical negotiation we’ve ever had with the union,” Sergio Rocha, chief executive officer of GM Korea, said in an interview at the Busan International 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,” Rocha added. “This is not good for GM Korea, this is not good for the industry, and this is not good for Korea Inc.”
The rising labor costs come after the Asian country’s Supreme Court decided last December that from now on the worker’s base pay would have to include periodic bonuses and other forms of compensation.
Already, Hyundai Motors, the biggest automaker in the country and its local affiliate, Kia Motors, are both fighting in court with their respective unions because of the new ruling. Estimates coming from the Korea Employers Federation said the court’s decision could add for South Korea’s companies further labor costs of more than 13.75 trillion won ($13.5 billion) each year.