Gwangju project talks held ahead of review

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Gwangju project talks held ahead of review

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Gwangju Metropolitan City and Hyundai Motor went into last-minute negotiations Monday as the city’s “Gwangju employment” project is deadlocked on labor issues.

The city council is scheduled to review funds budgeted for the project on Thursday.

In the “Gwangju employment” project, the city will build a vehicle factory in an attempt to boost employment. The plan is to pay the workers less than the industry average.

Hyundai Motor will make a 50 billion won ($44 million) investment in the project in exchange for the manufacturing of its models there.

Gwangju City Mayor Lee Yong-seop and Hyundai Motor President Chung Jin-haeng held a closed-door meeting Monday in Seoul, according to the carmaker and the city. Lee was expected to push the carmaker to finalize the deal.

It is the first time for the two to meet since the plan was disclosed early this year. The result of the meeting was not disclosed as of press time.

Under the broad terms of the proposed agreement, a car assembly line will be built at the Bitgreen National Industrial Complex in Gwangju by 2020 at the earliest. Hyundai Motor plans to invest 50 billion won in the 700-billion-won project. Once the factory is in operation, it is expected to employ 10,000 in the city, tenfold that when indirect employment is included.

The average annual wage for workers at the Gwangju car factory is expected to be about 40 million won. Workers at Hyundai Motor are paid over 90 million won a year.

The Gwangju factory was considered a breakthrough for Hyundai Motor, as the carmaker has been struggling with a labor union known to be highly demanding in terms of wages and working conditions.

Hyundai is negotiating for the Gwangju factory agreement to prohibit wage increases for the first five years.

Some conflict between the city and the carmaker developed after objections were expressed by local labor. The city requested Hyundai Motor to guarantee a predetermined production level and is pushing to have factory workers participate in the carmaker’s decision-making process.

The company has declined both proposals.

On Monday, Gwangju Metropolitan City budgeted 5.9 billion won for the project. The city council is scheduled to review the allocation on Thursday.

“If the city government and Hyundai Motor fail to find common ground before Thursday, the project is likely to get delayed or even get called off,” said an industry source who declined to be identified.


BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]

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