Unionized workers of GM Korea Co., the South Korean unit of General Motors Co., call for the retraction of a GM decision to close GM Korea's factory in Gunsan, during a protest held amid rain near the presidential office Cheong Wa Dae in Seoul, South Korea, 28 February 2018. On 13 February GM announced it would close the Gunsan car assembly plant, citing low productivity. Photo by Yonhap.
SEOUL, March 29 (UPI) -- GM Korea has urged its labor union to cooperate in wage negotiations by the end of the month, to make progress in drafting a self-help plan, as the firm teeters on the edge of bankruptcy.
Industry sources said Thursday that GM Korea President Kaher Kazem emailed employees the day before, informing them that the automaker cannot secure extra funds to cover costs in April unless the firm and the labor union reach an agreement on wages by the end of March.
The costs include a lump sum allowance that labor and management previously agreed to distribute to workers next Friday, KBS reported.
GM Korea says it needs around $561 million by the end of April to cover expenses including severance pay, after 2,600 workers voluntarily retired for severance payments and payouts equivalent to years of salary.
The U.S. auto firm has called on workers to accept a freeze in wages and forego bonuses to help the ailing company stay afloat. However, the trade union says GM must first withdraw its plan to close down one of its South Korean factories.
Kazem stressed that labor and management must reach an agreement on wages in order to prove to creditors the firm's commitment to sustaining operations, and that major shareholders, including parent company GM and the state-run Korea Development Bank (KDB), will not provide financial aid without seeing an active participation from all parties involved.
KDB, along with other creditors, have requested the two sides to agree on a self-help plan by April 20, in order to receive financial aid, Yonhap reported.
GM also says it cannot inject more funds into its Korea business unless the employees take the proposed wage freeze.
The tug-of-war between GM Korea and its unionized workers began after the company announced it would shutter its plant in Gunsan, compromising thousands of local jobs.
The company has requested financial support and tax benefits from the South Korean government, in order to secure the company's future operations in the country.
Authorities have called for a thorough due diligence and a plan to normalize the business as well as make new investments in the country.