Cost of Ordinary Wage Issue 52 Trillion Won for Car Manufacturers

The Korea Automobile Manufacturers Association announced on Jan. 7 that pending labor issues such as the scope of ordinary wages, direct employment of subcontractor workers, and additional payment for holiday work would result in an extra labor cost burden of approximately 52 trillion won on the part of employers, based on the result of its recent research project in association with the Korean Academic Society Of Business Administration & Law.

“More and more people seem to be considering that all types of disputes and conflicts concerning labor-management relations can be addressed only by court rulings,” the report pointed out, adding, “Unfortunately, this is weakening the top-priority value of the relations of voluntary agreements.”

According to the society, Korean companies’ burden is estimated to reach between 16.7372 to 38.5509 trillion won (US$15.2171 to $35.0497 billion) in the first year when regular bonuses are included in ordinary wages. The maximum amount assumes a three-year retroactive application. In addition, the burden reaches 5.4169 to 6.4149 trillion won (US$4.9249 to $5.8323 billion) when they provide full-time positions and direct employment for subcontract workers. Counting additional personnel expenses of 7.5909 trillion won (US$6.9015 billion) attributable to the extra pay for holiday work, the amount they have to bear is between 29.745 and 52.5567 trillion won (US$27.044 and $47.7835 billion).

“A series of the recent court rulings against the tacit agreement and established practice in the labor sector are disturbing the labor community as a whole and this will go on unless respect for voluntary action is reflected in the future legislation processes,” the society concluded.