GWANGJU, South Korea (Reuters) – Park Byung-kyu as soon as led Kia Motor’s union within the metropolis of Gwangju, combating for labor protections in opposition to the highly effective, family-run chaebol that dominated the financial system throughout South Korea’s fast industrialization.
FILE PHOTO: Members of Kia Motor’s union chant a slogan throughout a protest in opposition to the Gwangju joint-venture venture, in Gwangju, South Korea, January 31, 2019. Hong Jae-kwan/Kia Motor’s union/Handout by way of REUTERS/File Photograph
However about 20 years in the past, Park was assaulted by unionized staff wielding metal golf equipment after he campaigned for the rights of momentary staff at one other firm, leaving him paralyzed on the fitting facet of his physique.
The assault additionally left him disillusioned with the method of South Korea’s forceful and sometimes militant unions, which have confronted growing criticism for shielding their pursuits on the expense of different staff.
Now, Park is working for the town of Gwangju on a proposed three way partnership with Hyundai Motor Co to construct a brand new low-wage automobile manufacturing facility, Hyundai’s first new manufacturing facility in South Korea in 25 years.
The $616 million plant would create 1,000 jobs, however at lower than half the wages of Hyundai’s unionized staff and with out lots of the privileges they presently take pleasure in.
“The labor unions with vested pursuits ought to change. If not, their pursuits shall be taken away,” stated the 53-year-old Park. “Unionized labor ought to resist the truth.”
The unions of Hyundai and affiliate Kia Motors, which collectively type the world’s fifth-largest automaker by quantity, have staged strikes and rallies to protest the plant.
They are saying it can create “dangerous jobs” and take away manufacturing and employment from current factories.
However in a metropolis that has seen a gradual exodus of producing jobs transfer to low-cost nations, many job seekers say they might work for the plant in a heartbeat.
Employment is a key focus for President Moon Jae-in’s administration as Asia’s fourth-largest financial system struggles to create jobs within the face of a slowing China financial system, U.S. commerce protectionism and elevated minimal wages.
The Moon authorities plans to supply monetary help to the Gwangju plant, and likewise introduce related government-business ventures in two different cities by June.
Officers hope it can result in a “U-turn” of Korean firms which might in any other case construct factories abroad.
“It is a daring experiment to resolve jobs and labor relations issues,” stated Park Myung-joon, a senior analysis fellow at state-funded Korea Labour Institute, who has been concerned within the venture since its starting in 2014.
The carmaking enterprise, the primary of its type in South Korea, is the most important menace up to now for legacy unionized auto staff, who’ve largely maintained excessive wages and advantages even with youth unemployment close to a file excessive and the financial system sluggish, Park stated.
“The costly union jobs will steadily disappear.”
The proposed Hyundai manufacturing facility will provide annual wages of 35 million gained ($31,492) – simply over a 3rd of the typical 92 million gained that current Hyundai staff earn, however increased than the typical 33 million gained salaried staff make in Gwangju.
House to Kia Motor’s largest home manufacturing facility, Gwangju is South Korea’s No.2 motor metropolis after the southeastern metropolis of Ulsan, producing over 40 p.c of its manufacturing output from the auto sector.
Like Ulsan, which has declined as Hyundai manufacturing has retreated, Gwangju’s fortunes have waned as Kia’s output fell to its lowest stage in eight years final yr.
Gwangju is now South Korea’s second-poorest metropolitan metropolis, with common month-to-month wages some 13 p.c under the nationwide common in 2017, in accordance with labor ministry information.
Kim Jae-seung, who studied enterprise administration in school, stated he’s prepared to use for a blue-collar job on the deliberate plant. “Its wage remains to be above the typical employee’s wage. In that sense, it’s not a foul job. It’s a good job,” the 32-year-old Kim stated at a latest job honest held on the metropolis corridor.
Different job seekers in Gwangju interviewed by Reuters stated they too have been given excessive ranges of unemployment among the many metropolis’s youthful staff.
“There aren’t many high quality jobs on the market. Given the present financial state of affairs, I’ll be grateful for the 35 million gained wage,” stated Goh Chang-hoon, a 27-year-old legislation main.
DEFUNCT GERMAN MODEL
Park, the previous union chief, first proposed the low-wage manufacturing facility in 2014 and later took a depart of absence from Kia to work full-time for the town authorities.
Park stated he borrowed the thought from Volkswagen’s now-defunct low-cost division Auto 5000, which was created in 2001 to maintain jobs from transferring out of Germany. The venture got here to finish in 2009, after the automaker gained wage concessions from its highly effective and extremely paid legacy staff.
The brand new manufacturing facility would have an annual capability of 100,000 mini, gasoline-powered SUVs beginning 2021.
Gwangju additionally hopes to make electrical automobiles on the plant sooner or later, though it has but to be agreed with Hyundai.
James P. Rooney, a world finance professor at Sogang College in Seoul, stated to achieve success, the plant ought to make electrical automobiles.
“The three way partnership shouldn’t be considered a spot of getting away from union and excessive labor value. It needs to be based mostly on the product of the long run, not product of the previous.”
Hyundai stated it has determined to take part within the venture, as a result of the town, area people and the three way partnership pledged to “construct collaborative labor relations and preserve correct wage ranges”.
“Beneath such situations, we believed that we might have the ability to safe competitiveness once we outsource mini-vehicle manufacturing to the newly created company,” Hyundai stated in an announcement to Reuters.
Kim Yong-gu, chief govt of Hyundai Hitech, a Gwangju-based elements provider for Kia, is hoping the brand new Hyundai manufacturing facility will assist make up for decreased output at Kia.
Kia’s Gwangju plant produced 455,252 automobiles final yr, effectively in need of its manufacturing capability of 620,000.
“Kia can’t make the automobile with present labor prices,” Kim stated.
Along with decrease wages, the three way partnership will break free from the union’s custom of hanging virtually yearly throughout annual wage talks.
South Korea’s repute for militant unions and inflexible labor practices has lengthy been cited as contributing to excessive labor prices and a persistent low cost for company Korea.
To make up for decrease pay, Gwangju plans to construct 1,100 houses in addition to daycare and gymnasium services within the manufacturing facility complicated, with the central authorities’s assist.
The plan isn’t with out its critics, who query the knowledge of including one other plant at a time when automakers are grappling with extra capability amid sluggish home demand, falling exports to america and weak gross sales in China.
Auto manufacturing in South Korea is predicted to fall to three.65 million automobiles this yr, simply three quarters of complete capability of four.66 million automobiles, auto unions say.
Additionally they argue the venture is politically motivated, with Gwangju lengthy a political stronghold of Moon’s liberal authorities.
“We’ve got been agonizing over how you can create jobs at a time when low progress and low employment have turn out to be structural points,” Jung Tae-ho, the presidential job secretary, stated at a latest briefing.
“The venture shall be key to revitalizing the struggling native financial system.”
Native officers acknowledge the plan isn’t the panacea to all the issues Korea’s manufacturing business faces, however say it may well present one path ahead.
“This isn’t nearly creating jobs in Gwangju, however about addressing Korean Inc’s structural issues of low progress, low employment and excessive value,” Gwangju Mayor Lee Yong-sup advised Reuters. “Korea Inc wants a breakthrough.”
Reporting by Hyunjoo Jin; Extra reporting by Edward Taylor in FRANKFURT; Enhancing by Soyoung Kim and Lincoln Feast.
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