Hyundai Motor refused a revised plan that removed a restriction on collective wage bargaining at a proposed plant in Gwangju, further complicating plans for the factory. A council with representatives from the local government and area employers, labor unions and citizens on Wednesday agreed to remove a clause from the agreement that would have suspended collective bargaining for about five years at the new joint venture between the Gwangju city government and Hyundai Motor.
The new company will be hiring workers for a production plant to be built on 628,000 square meters (155 acres) of land in the Bitgreen National Industrial Complex. The venture is the first in Korea to bring government and private industry together in the formation of a new manufacturing facility.
Union representatives strongly protested the clause, calling it toxic.
Rather than pushing the clause, the council decided to offer three alternative proposals to Hyundai Motor. The city and the automaker will continue negotiations.
“Over time, Hyundai Motor and the labor union have retreated in their demands,” said Lee Byung-hoon, Gwangju vice mayor. “But the suspension of the wage bargaining clause was the biggest issue.”
After the announcement was made, it was Hyundai that refused the proposal.
“We cannot help but to point out the repeated revisions and backtracking [done by the Gwangju government],” Hyundai said through a statement.
In the first meeting held at 10:30 a.m., all nine labor representatives, including Yoon Jong-hae, head of the Federation of Korean Trade Union’s Gwangju office, refused to attend in protest of the wage bargaining ban.
The agreement between Gwangju city and the Korean automaker had included a clause in which wage negotiations were to be suspended until the cumulative production of compact SUVs reached 350,000 units. As Hyundai Motor guaranteed a minimum of 70,000 units a year, the labor union estimated that it would take about five years before the employees at the new plant would be able to negotiate.
The meeting resumed at 3 p.m., and Yoon joined, raising the number of attendees to 22 out of a possible 28.
The plant proposal has been under a tight deadline as an agreement needs to be reached before the National Assembly passes the budget. The ruling Democratic Party has announced that it plans to pass next year’s budget soon.
Meeting the budget deadline is crucial as the city needs government funding to build the necessary infrastructure, including housing that will cost roughly 300 billion won ($269 million).
The Gwangju plant project, first proposed in June 2014, has generated significant public interest as it could keep manufacturing jobs in Korea and contribute to the revitalization of the regional economy. It would also help ease the burden of high labor costs.
The plan is for the Gwangju government and Hyundai Motor to create a new joint-venture company. The new Hyundai Motor plant will have the capacity to produce 100,000 compact SUVs a year.
One of the key factors in this new job creation model is that employees will receive an annual salary of 35 million won, 38 percent of the 92 million won average salaries of Hyundai Motor workers.