Survival Hinges on KDB's Support
SsangYong Motor's labor and management are calling for government support to stay afloat.
The automaker announced on April 20 that it held a signing ceremony for wage and collective bargaining agreements for 2020 at its Pyeongtaek plant on April 17. The labor and management reached a dispute-free settlement for 11 consecutive years. SsangYong was the first automaker in Korea to wrap up wage and collective bargaining negotiations for 2020. In order to stabilize employment, the labor and management have agreed to share pain.
The company’s labor and management are implementing all possible pain-sharing measures for survival. In 2019 alone, they came up with two self-help plans including the introduction of a sabbatical system for white-collar workers with over 25 years of service, returning 200 percent bonuses and suspending or reducing 22 welfare benefits for employees. In 2020, they even froze wages. In order to secure liquidity, non-essential assets such as Busan Logistics Center have been put up for sale. Recently, India’s Mahindra Group, SsangYong’s parent company, has finalized its plan to provide 40 billion won to solve the Korean firm’s short-term liquidity problems.
The ailing carmaker’s survival hinges on support from Korea Development Bank (KDB). However, the bank has not clarified its position. There is no justification for the bank’s financial support for the carmaker as the state-run bank does not hold any stake in it. Even so, it is unreasonable for KDB to let SsangYong Motor go under with its 5,000 employees. Industry analysts say that SsangYong Motor needs to take additional self-rescue measures in order to attract support from KDB.