Different Results
It has been found that GM Korea’s cumulative losses have increased rapidly since the company included bonuses in ordinary wages whereas Renault Samsung Motors’ net profit exceeded 300 billion won last year after the company did the opposite.
GM Korea included bonuses in ordinary wages in July 2014 and backdated the policy to March 2014. This resulted in an additional annual labor cost of approximately 130 billion won and a net loss of 333.1 billion won in 2014 alone. Besides, the net loss increased to 993 billion won in 2015 and reached 619.4 billion won in the following year. According to the company, the additional labor cost for the three years that is attributable to the policy is estimated at 400 billion won to 500 billion won. Under the circumstances, rumors are circulating that GM Korea will withdraw from the South Korean market.
Renault Samsung Motors took the opposite direction. In October 2014, its union members dropped their suit in less than one year, saying that regular bonuses and certain allowances do not have to be included in their ordinary wages.
The automaker’s sales jumped from about three trillion won to over five trillion won between 2014 and 2015 and then to more than six trillion won last year, when its net profit increased more than 20% from a year ago and reached 310.4 billion won. According to industry sources, this might have been impossible if the company had included bonuses in ordinary wages because an additional labor cost of 116.8 billion won might have been incurred in 2015 alone in that case. The company’s net profit was 196.7 billion won in 2014.
“The case of GM Korea shows that ordinary wages including bonuses can have severe repercussions,” one of them mentioned, adding, “With the first trial ruling on the same issue around the corner with regard to Kia Motors, it is predicted that an additional financial burden of about three trillion won will be incurred and then the company will go into the red if the employers lose the case.”