Resumed wage talks between union representatives and management of GM Korea ended without progress on Wednesday, while unionized workers held a sit-in protest in the heart of Seoul, demanding the carmaker withdraw its decision to shutdown a plant in Gunsan.

Both parties were resuming the talks for the first time since GM‘s surprise announcement to close one of its three plants last month. The management reportedly came with an intensive restructuring plan to freeze all wages and skip bonuses, as well as reducing workers’ benefits.

The talks, however, ended without the two sides narrowing the gap, with the union demanding the US carmaker sustain its loss by itself, refusing to accept a wide range of belt-tightening measures, saying they are not responsible for its loss. The union represents 13,000 workers in GM’s three plants. 

GM Korea believes that the wage talk with its union is the first step to save its lossmaking business, as it could save some 300 billion won in an effort to convince its head office that its operation here is still viable.

A GM executive told Korean lawmakers last week that it is mulling allocating production of a sports utility vehicle and a crossover utility vehicle here, while asking the government for cash to turn around its business.

The production allocation decision, which could make the US carmaker stay at least five to six years according to GM, is considered influential to the South Korean government’s decision whether to provide subsidies and other benefits.

Meanwhile, the company notified 500 non-unionized workers early this year that it will freeze their base salaries as part of cost-cutting efforts. Workers subjected to the forced wage cut include executives and team leaders who are not members of GM Korea’s labor union. The company has also stopped executives using corporate cards and reduced extra spending for office operations, according to insiders.

GM Korea has started to receive applications for its voluntary retirement program from all of its 16,000 workers from its plants in Bupyeong, Changwon and Gunsan.

The local unit of the US carmaker also asked the union to freeze base salaries and skip bonuses this year as well as to suspend other benefits including school tuition for workers’ children and lunch allowances.

Last week, the management said it wants to save at least 310 billion won a year through a wage cut and slashing office benefits. A GM worker with a union membership received about 10 million won in annual bonus even though the company was in the red.

Meanwhile, contract workers at GM Korea’s Gunsan plant said they were told to leave the company by the end of March. At an emergency meeting held at Gunsan city hall, around 200 irregular workers were given such notice, but without any severance packages.

Unlike regular workers, contract workers do not have access to GM’s voluntary retirement program which offers two to three years of salary as compensation.

Workers at GM have been raising voices, questioning the company’s motive behind the wage cut that it is shifting the burden only to them, not executives with high salaries and benefits.

According to local reports, the management has decided to accept the labor’s demand to reduce the number of foreign executives here. GM Korea currently has 36 foreign executives but will send half of them back. 

The union claimed that GM Korea paid around 500 million won for each foreign executive for accommodation and education expenses. If adding the number of file-and-rank foreign employees stationed here, the spending might reach 50 billion won a year, the union said. The company was not available to confirm the reports.

By Cho Chung-un (christory@heraldcorp.com)