GM Korea could see 15% labor cost increase following high court ruling

Article by Christian A., on June 3, 2014

Sergio Rocha, chief executive of GM Korea, disclosed that labor costs in the country may surge 15 percent. Because of this, he described the 2014 wage negotiation as the most critical negotiation that the carmaker will have with the local union. In an interview with Bloomberg, Rocha said he will do “everything possible and impossible” to guarantee that GM has a sustainable future.

Companies in South Korea are clenching their teeth for higher labor costs after the Supreme Court ruled in December 2013 that periodic bonuses and other compensation should be counted in workers’ base pay.

The Hyundai-Kia group is also facing unions in court over the same matter. Rocha remarked that including bonuses and other benefits into the base pay will make labor cost grow substantially, noting that ruling is not good for GM Korea, for the industry, and for Korea Inc.

South Korea’s Supreme Court ruled in favor of employees of KB AutoTech Co., who filed a lawsuit against South Korea-based parts maker in July 2010 to have the bonuses they get every other month included as part of their base pay.

The court, however, dismissed workers’ claims that seasonal allowances and welfare benefits should also be integrated in wages.

The ruling will mean at least KRW13.75 trillion ($13.5 billion) in added annual labor costs for companies, according to estimates by the Korea Employers Federation in December 2013.

According to Rocha, an increase in base salaries hikes overall wage costs since they are used to calculate everything from overtime payments to annual raises. [source: Bloomberg]

Topics: gm, south korea

If you liked the article, share on:

Comments

Recommended

What has BMW been up to lately? The company recently announced that they are currently focusing on electrification, and so far, their new architecture will enable “electrification of every model...
by - July 26, 2017
A couple of days ago, Ford came out with their pursuit-rated F-150 Police Responder, and we were quite impressed with what it has to offer. And we are pretty sure...
by - July 26, 2017
Aside from fronting Honda’s annual summer tour, pop rock band OneRepublic was also given an opportunity to customize a 2017 Honda Civic Type R. The car is a one-off and...
by - July 26, 2017
Everyone seems to know that the Alfa Romeo Giulia has been recently experiencing problems. Turns out, the blame goes to Giulia’s software. Reid Bigland, big time executive from Alfa Romeo...
by - July 26, 2017
Romanian automotive media publication cars.ro earlier said that the new Ford Fiesta will no longer be offered in the United States. Robert Stiller, Ford’s vehicle program manager for the B-segment,...
by - July 26, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries