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article imageOp-Ed: GM cutting 2,600 jobs in South Korea

By Ken Hanly     Apr 9, 2018 in Business
Bupyeong - General Motors in South Korea is cutting some 2,600 jobs and threatens to leave the country unless the union at the GM's Bupyeong factory near Seoul grants concessions.
Public attitudes have changed?
According to a recent Reuters article the situation has changed since the previous owners of the plant Daewoo went bankruppt in 2001. Then the public was sympathetic to the workers. An employee, Lee Bum-yeon said that his neighbours at supermarkets and bakeries gave his children free snacks and bread. He said: “People felt sorry. People felt heart-broken. They were worried how we were going to make a living."
Lee claims attitudes have changed and he felt that no one felt any sympathy for the workers any more. Lee was rehired by GM in 2002 a year after they bought Daewoo.
According to the Reuters article South Korea has a reputation for militant unions and rigid labor practices that create high labor costs and South Korean companies are typically undervalued in comparison with their global peers, creating what is known as the Korea discount.
The article appears to have a somewhat anti-union bias. There are no general data about how the union or unions are percieved just one person's feelings. Many in the area must be pro-union or it would have been decertified. South Korean vehicles are able to compete successfully in global markets in spite of the claimed costs created by unions. It seems that the GM plant must be facing specific problems that make it uncompetitive.
The article notes that Korean labor leaders are under pressure to make concessions as car manufacturers look to shift jobs to countries with lower costs. This has always been the case to some extent but labor costs are just one of many factors that need to be considered. Labor costs are no doubt higher in Europe and the United States but there are still many successful car maufacturers there and foreign manufacturers often build plants in the US..
There is always a tension between militancy and reaching a deal
Kim Sung-Soo a fund manager at LS Asset Management, said: “I expect militant unions to become more reasonable, which would lead to enhanced labor flexibility. Unions have learned a lesson from past incidents where they can lose all if they go militant.”
South Korean unions fought against powerful conglomerates in the past
The article does note that the unions fought for democracy in the past but discusses the issue under the heading "Democracy to Militancy" . However, the unions were surely militant during the period when they fought for wages and basic labor rights in a country dominated by powerful family-run conglomerates chaebols.
The chaebols helped create the rapid industrialization of South Korea during the 1980's and 90's. The unions also as the article notes led in the fight for democracy against authoritarian governments, and enjoyed backing from non-union workers in small firms as well as the broader public.
Chaebols are described by Wikipedia as follows: "A chaebol (/ˈtʃeɪbɒl/,[1] /ˈdʒɛbəl/;[2] Korean: [tɕɛ̝.bʌl] (About this sound listen)) is a large industrial conglomerate that is run and controlled by an owner or family in South Korea.[2] A chaebol often consists of a large number of diversified affiliates, controlled by an owner whose power over the group often exceeds legal authority.[3] The term is often used in a context similar to that of the English word "conglomerate".[citation needed] The term was first used in English in 1984.[2] There are several dozen large South Korean family-controlled corporate groups that fall under this definition."
The chaebols still exist but their power and influence in politics have declined. In 2014 however Samsung the largest chaebol comprised approximately 17 of the total South Korean economy and had about $17 billion in cash. However, the income and profits of the chaebols has been declining. Many are losing talent and suffering losses.
Power and influence of unions have been weakening
As in many other countries union influence has been weakening. The article claims that the public now sees them as an "interest group which seeks to maximize their own interest". As their history shows the unions at least in the past have pursued wider interest and included democratic rights. No doubt with increasing globalization and the increase of corporate power over the unions and working people, many unions have retreated in their aims and do mainly try to advance their own interests as they are threatened and see the narrower pursuit as necessary to survive. However, it is in the interest of corporations to portray them as self-interested in order to decrease the breadth of their appeal and power.
Union membership in Korea is in steep decline and has reduced by half in the last 2 decades alone. In 2016 only ten percent of South Korean workers were in unions. Of members in the Organisation for Economic Cooperation and Development only Turkey had a lower union concentration.
GM has already closed one South Korean plant
GM employs about 16,000 South Koreans. It announced in February that it would close a plant in Gunsan. It is weighing options of closing the three other plants it has in the country.
GM's union has already promised that it will not seek a pay raise or bonuses for this year during annual wage talks.
However, GM's South Korean plants are all losing money. GM says it will file for bankruptcy unless the union agrees to even more cost cuts and concessions by April 20th.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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