중앙데일리

Workouts Prove They Do Work

At Ssangyong Motor, Support Brings Better Wages

July 10,2001
Several companies that have received financial support from the government and lower interest rates from banks under a workout program are raising wages or plan to do so in the near future.

Chohung Bank, whose main shareholder is the government, said Monday that management at Ssangyong Motor recently agreed with the company's labor union to increase wages by 3.5 percent and give one-time, 2 million won ($1,543) incentives as Ssangyong's performance improved during the first half of the year. Chohung is a main creditor of Ssangyong.

"Chohung Bank converted Ssangyong's 116 billion won debt to equity and lowered interest rates on the rest of its debt as low as 4 percent depending on availability of collateral for the debt. With the increase in wages, labor expenses will rise by 23 billion won just this year," a Chohung Bank official said. The official added, "The companies under a workout program are having a feast at the expense of financial institutions."

Ssangyong's labor union responded, "The revenue and operating profit reached the target stated in the contract when Ssangyong Motor entered the workout program. The wage increase and incentive help boost morale."

Ssangyong Motor posted 57.7 billion won in operating profit for the first five months this year, but net income was still negative after interest payments. Ssangyong Motor's creditors plan to make a decision on whether to approve the wage increase in a couple of days.

Both Daewoo Shipbuilding and Marine Engineering Co. and Daewoo Heavy Industries & Machinery, whose 1 trillion won worth of debts were converted to equities last year, increased wages by 3.9 percent and 3.6 percent last year. Because the companies performances improved this year, their labor unions demanded 10.7 percent and 8.4 percent increases from the current wages. The companies plan to lower the rate through negotiations since they are still under workout programs.



by Lee Young-lyoul




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