Gwangju-style jobs break the ‘union-free’ promise, join the Korean Confederation of Trade Unions

Democratic Party of Gwangju Global Motors (GGM), a representative company of the ‘Gwangju-type job’ project launched in 2019, advocating no union and no strike operation through a grand compromise between labor, management, civil society, and government. It was confirmed on the 24th that the Federation of Trade Unions was established. Going forward, GGM’s wage and collective negotiations will be handled by the head of the Gwangju-Jeonnam branch of the Korean Metal Workers’ Union. Following the breaking of the no-union promise by creating a company-specific union in February, and with the union joining the Korean Confederation of Trade Unions, the possibility of breaking the promise of ‘not going on strike until 350,000 units produced’, which was the core competitiveness of the Gwangju-type job project, has increased. It comes out.

According to this paper’s coverage, the GGM union unanimously changed its organizational form on the 22nd to become affiliated with the Korean Metal Workers’ Union of the Korean Confederation of Trade Unions. The Metal Workers’ Union, an industry-specific labor union, has 190,000 members from over 400 companies, including Hyundai Motors. The chairman of the Metal Workers’ Union has bargaining authority with these 400 companies. Previously, GGM wage and collective bargaining was handled by an organization called the ‘Win-Coexistence Council’, in which management and employee members participate, but starting this year, the Korean Confederation of Trade Unions will take over this organization.

The Korean Confederation of Trade Unions immediately announced a hard-line struggle against GGM. The Korean Confederation of Trade Unions said in its internal newsletter that day, “Only powerful unions can choose struggle and dialogue,” and “Shrimps are fish, but whales are rice.” “The Metal Workers’ Union shrimp will beat the GGM whale,” he said.

Experts believe that the reason the Korean Confederation of Trade Unions was established in GGM was because of the differences in perspectives between labor and management regarding treatment. The Gwangju-type job project was intended to increase local jobs by attracting corporate investment by promoting low wages. However, as the annual salary was set at around 35 million won, the lowest in the automobile industry, actual workers were very dissatisfied. The GGM union said, “We will change low wages and unreasonable treatment with the help of the Korean Confederation of Trade Unions and others.”

GGM is an automobile consignment production company created through the ‘Gwangju-type Jobs’ project, which was promoted as a national task during the Moon Jae-in administration in 2019. Gwangju City, Hyundai Motor Company, Korea Development Bank, etc. invested, and the Federation of Korean Trade Unions and local civic groups participated, and entered into an agreement to ‘receive lower annual wages than the automobile industry and not go on strike until the cumulative production reaches 350,000 units.’ However, because this was a kind of gentleman’s agreement between labor, management, the private sector, and the government, it was not legally binding. The labor community, including the Korean Confederation of Trade Unions, has argued that the ‘Gwangju-type jobs’ model itself is illegal, saying that it runs counter to the Constitution’s guarantee of the right to strike. Because of this, there is a greater possibility that the promise of no strike will actually be an empty promise.

There is also an analysis in the industry that the launch of the Korean Confederation of Trade Unions was actually just a matter of time. The Moon Jae-in administration boasted that GGM attracted local jobs through low wages, but complaints about treatment continued. The annual salary of GGM workers is about 35 million won, which is the lowest in the automobile industry. There were many complaints among employees that compared to the average wage of Hyundai and Kia employees, which was around 100 million won, “We make the same cars, but even the difference is too big.” Gwangju Metropolitan City’s promise to pay a ‘social wage’ of about 7 million won per year, including the construction of company housing, is only partially being fulfilled.

Because of this, it is reported that more than 50 people resigned from GGM, which has about 600 employees. In recruitment-related communities, GGM employees describe the company as a ‘stepping stone for job change.’ The GGM union criticized, “There is no hope for GGM when young people leave,” and “It is Gwangju-style passion pay with an hourly wage of 11,730 won without any allowances and no regular bonuses.” The Korean Confederation of Trade Unions also said, “Gwangju-type jobs have failed.” However, GGM management said, “GGM was a company that advocated appropriate hours (44 hours a week) and relatively low wages from the beginning,” and “nothing has changed from the promise.”

The industry believes that GGM’s abnormal profit structure, which relies on Hyundai Motors, is also likely to become a problem. GGM recorded sales of 106.5 billion won and operating profit of 23.6 billion won last year, with an operating profit ratio (operating profit compared to sales) of 22.2%. This figure is about twice higher than that of Hyundai Motor Company, Toyota, and Tesla.

The reason such profits are possible is because of the contract signed with Hyundai Motors. A GGM official said, “The contract was concluded with a structure to reduce Hyundai Motor’s profits and increase GGM’s profits by selling one vehicle.” Some inside and outside of Hyundai Motor Company even refer to the contract with GGM as a kind of ‘social contribution.’ Moreover, the future of Casper, a compact car produced by GGM, is not bright. GGM initially set a target of producing about 70,000 Casper units per year, but production from September 2021 to last year was only 110,000 units. Moreover, Casper sales last year were 45,000 units, down 6.2% from the previous year. They are planning to produce the Casper electric car this year, but the sales outlook is not bright as electric car sales have slowed significantly recently.

In this situation, GGM is known to have recently requested Hyundai Motors to allocate additional vehicles to increase production. However, since this is a matter of agreement between Hyundai Motor Company’s labor and management, the possibility of its realization is not high. An automobile industry official who requested anonymity said, “If the Korean Confederation of Trade Unions leads a strike at GGM, Hyundai Motor Company will have no choice but to distance itself from GGM.” GGM said, “It is true that the original purpose of the labor-management-private-government agreement is being threatened, but we will have many conversations with the Korean Confederation of Trade Unions.”