GM prepares to leave South Korea, doles out generous compensation package

While GM will shutter its plant at Gunsan by May 2018, it has yet to disclose on the fate of the remaining 3 plants in the country.

As part of its voluntary redundancy plan, the South Korean unit of General Motors is offering employees three times their annual base salary along with $9,000 and money for college tuition as the carmaker plans on preparing its exit from the country.

On Tuesday, GM stated it plans on closing its plant located in Gunsan by May 2018 and deliberate on the fate of the remaining three plants in the country.

On Wednesday, unionized workers staged a protest regarding the planned shuttering of the plant.

According to internal documents, GM’s Voluntary Separation Programme, which opened to employees on Tuesday, wil be available upto March 2 2018.

“This is the most compensation we can provide given our management conditions and it will be difficult for us to offer more benefits going forward,” said GM in a letter.

“GM Korea has recorded a financial loss of nearly 3 trillion won ($2.8 billion) over the past four years and continues to make losses as a result of low utilization rates, continued rises in labor costs and an excessive workforce”.

GM has disclosed it will incur a $850 million charge regarding these restructuring costs, including $375 million in cash related to employee expenses.

A spokesman for GM confirmed the details contained in the letter saying the carmaker’s offer was “part of efforts to proceed with restructuring in an orderly manner”.

Incidentally, the average annual wage at GM’s plant in South Korea is around 87 million won; in comparison the average household income in South Korea was 50.1 million won in 2016.

Employees who take up the Voluntary Separation Programme will be eligible, for up to 13.2 million won, towards 2 years of university tuition. Education fees for kindergartens and junior and high schools for their children will also be covered.

A source at GM Korea stated, it let go of nearly 150 factory workers in 2017, under a similar compensation package.

($1 = 1,076.8000 won)

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