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Korean Carmakers Threaten to Move Production Overseas
South Korea’s five carmakers say they may move production offshore if the country’s high court rules they must include bonuses and other extra pay as part of regular wages, The Korean Herald reports.
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South Korea’s five carmakers say they may move production offshore if the country’s high court rules they must include bonuses and other extra pay as part of regular wages, The Korean Herald reports.
The companies, speaking though the Korea Automobile Manufacturers Assn., say such a ruling would be a “deadly blow” to them and their suppliers. KAMA figures that forcing manufacturers to include extra compensation as pay would hike costs for pensions and both overtime and holiday work by tens of trillions of won.
Kia Motors Corp., whose workers initiated the lawsuit, estimates such a change in how compensation is figured would cost it about 3 trillion won ($2.6 billion) per year. The court was expected to rule on Aug. 17, but a decision has been delayed.
The Herald notes that lower courts sided with Hyundai Motor Co., Kia’s parent company, in a similar case. KAMA argues that the government’s own guidelines don’t consider bonuses as ordinary wages.
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