Gm Korea Urged to Cut Labor Costs

The lobby group representing the interests of automakers here is calling on GM Korea to reduce its labor costs if it wants to stay afloat.

The Korea Automobile Manufacturers Association (KAMA) said Monday the debt-ridden carmaker's labor costs-to-sales ratio is too high, compared to its domestic rival carmaker, Renault Samsung.

According to the KAMA study, GM Korea workers are on average 8.6 years older than Renault Samsung workers. Their average length of service is also 6.8 years longer than Renault Samsung workers.

GM Korea also pays an average wage of 86.7 million won ($80,929) per worker, 21.2 million won higher than Renault Samsung's 65.5 million won. The ailing carmaker's labor costs-to-sales ratio is also 11.4 percent, more than double Renault Samsung's 4.4 percent.

In the study, the KAMA highlighted Renault Samsung's efforts in burden sharing when the carmaker experienced a decline in production, domestic sales and exports in 2011.

During the 2012 management and labor negotiations, Renault Samsung workers accepted the company's demands to freeze their wages while working overtime. Also, management and workers frequently had lunch meetings to discuss improving the carmaker's production capacity.

As part of improving the carmaker's productivity, Renault Samsung decided to slash the salary step to introduce annual pay while implementing peak wages.

The single salary step is one of GM Korea's chronic reasons for their high production costs, the study said.

"GM Korea's poor sales are attributed to the Detroit headquarters' decision to withdraw its Chevrolet operations from Europe and Russia. But it wasn't the major reason," the KAMA said.

The major reason was GM Korea's high production costs, falling short of the global automobile industry's...