A South Korean city council on Wednesday agreed to a revised plan for a low-wage automaking joint venture with Hyundai Motor, establishing the stage for the building of the automaker’s first factory at home in more than two decades.
The proposed plant in the southwestern city of Gwangju remains in line with Seoul’s policy to spur job creation, but comes as Hyundai is coming to grips with excess capacity around the world amid slow-moving domestic demand, dropping U.S. exports as well as weak China sales.
With unemployment rates hitting a 17-year height in 2018, South Korean President Moon Jae-in has called on the nation’s biggest automaker to build a regional factory. The liberal government considers Gwangju as its political stronghold.
The common council stated it intends to sign the deal with Hyundai on Thursday after final settlements and also, according to a city official, Moon is expected to participate in the signing ceremony.
A preliminary deal for the JV had actually been gotten to early last month. It included an annual wage of 35 million won ($31,341.51) for JV employees, or less than half the typical 92 million won that the car manufacturer’s unionized employees earn.
However the strategy was scuttled as labor representatives in the city council called for a modification to terms that enable the JV to skip annual wage settlements with its workers.
Hyundai had rejected the proposal.
The council has currently agreed on an endangered plan regarding collective wage bargaining, the city officials stated, without specifying because of the confidentiality of the issue.
Hyundai’s labor union released a statement, claiming it will certainly “fight strongly” against the company and also the government. The union worries the JV would place downward pressure on earnings, and ultimately eliminate production and also work.