GM Korea to cut office workforce by offering voluntary retirement scheme

Article by Anita Panait, on November 22, 2012

GM Korea, a unit of General Motors, is planning to reduce its workforce by introducing a voluntary retirement scheme open to its 7,000 office workers, a source told Reuters. The disclosure came weeks after union officials disclosed that they were informed that the production of a new Chevrolet model would be transferred to Europe and four other regions.

GM Korea spokesman Park Hae-ho confirmed the plan, saying that it was aimed at "enhancing its organizational efficiency," adding that this is the first time the company has made such scheme available to all its office workers. GM Korea has implemented an earlier scheme applicable only to senior office workers.

Park noted that its 10,000 production workers will not be affected by the job cuts. The move is raising worries about a restructuring at GM Korea, which is pressured by Hyundai Motor, Kia Motors and by imported vehicles from Germany, Japan and other countries. The South Korean market is dwindling, no thanks to the global economic slowdown and the heavy household debt. Other carmakers in South Korea are also affected.

For instance, the South Korean unit of French carmaker Renault reduced its workforce by 15 percent or by 800 workers through a similar program. GM’s market share in South Korean has dropped below 10 percent since 2008. In the first ten months of 2012, GM had a 9.4 percent market share in the country, while domestic giants Hyundai and Kia controlled around 80 percent.

GM Korea, which is the third best-selling carmaker in South Korea after Hyundai and Kia, commenced receiving applications for its latest scheme on Nov. 20 and will stop it on Dec. 14. Under the program, workers will receive compensation of up to two years' salary, two years' school tuition support and a car voucher worth KRW10 million ($9,200), according to a Nov. 20 company notice obtained by Reuters.

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