Wednesday, June 20, 2018
GM Korea Stands in 840 Billion Won Contingent Liabilities for Ordinary Wages
Labor Union’s Excessive Demand
GM Korea Stands in 840 Billion Won Contingent Liabilities for Ordinary Wages
  • By Jung Min-hee
  • March 7, 2018, 23:45
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GM Korea can have US$777 million (840 billion won) of contingent liabilities from its ordinary wage lawsuit.
GM Korea can have US$777 million (840 billion won) of contingent liabilities from its ordinary wage lawsuit.

 

General Motors' Korean operation, which is currently in in a life-or-death situation, have been found to have contingent liabilities of a whopping 840 billion won (US$777 million) related to ordinary wages after its labor union asked the company to pay back three years of regular bonuses that were not included in ordinary wages before 2014. When the company loses the case, 500 billion won (US$467.51 million) of taxpayer’s money will go to the labor.

According to an annual report in 2017 from the GM headquarters in the United States on March 7, GM Korea can have US$777 million (840 billion won) of contingent liabilities from its ordinary wage lawsuit. The contingent liabilities will be confirmed debts when the situation changes like the outcome of the case. The litigation is related to ordinary wages that include US$592 million (640 billion won) for production workers and US$185 million (200 billion won) for office workers.

The GM headquarters has decided to shut down its plant in Gunsan due to financial difficulties and asked the South Korean government to make the Korea Development Bank chip in 500 billion won (US$467.51 million) or grant loans for the capital increase of 3 trillion won (US$2.81 billion) that will save GM Korea.

Even with supports, however, GM Korea is highly likely to see its normalization plan fail when the company loses the ordinary wage case. The automaker needs to pay 500 billion won (US$467.51 million) in cash to 2,500 workers who applied for voluntary resignations. GM Korea needs an additional 840 billion won (US$785.41 million) when it loses the litigation. Nearly half of the capital increase will go to the labor. An official from the industry said, “The company is most likely to pay especially 200 billion won (US$187 million) out of the 840 billion won (US$785.41 million). However, the labor union maintains that it won’t drop the suit, saying, “That is the money they should be paid.”