Renault Samsung Motors deal achieved

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Renault Samsung Motors deal achieved

The year-long labor dispute at Renault Samsung Motors seems to be at an end, with the two sides reaching an agreement late Wednesday on wages and working conditions.

Management and labor tentatively approved terms that are largely based on a preliminary deal reached last month.

Under the agreement, base salaries will be frozen, but workers will receive benefits worth around 10 million won ($8,500). A joint statement was issued in which both sides indicated they want the dispute to end.

Workers will vote on the new deal today.

The agreement came just six hours after labor called off a full strike on Wednesday, which threatened to escalate the dispute from one so far characterized by a series of partial strikes.

Pressure had been building on the union as the company announced a partial lockout of operations at the automaker’s only plant in Busan and threatened to take legal action for losses from the strikes.

The union had earlier said in a statement Wednesday that it would return to negotiations as a full strike would place a burden on its members.

The recent strike was criticized by union members, and some decided to boycott the decision and show up to work.

Experts believe that the situation became untenable for the union leadership as it was unable to maintain a united front.

“There was pressure from within the union from members who became increasingly opposed to the strikes and also worsening public opinion about the situation,” said Kim Tai-gi, professor of economics at Dankook University. “Talk of reduced orders likely led union members to seek a quick end to the negotiations.”

The dispute over wages that began in June last year has led to a difficult situation for Renault Samsung Motors.

The union has staged partial strikes since last October as negotiations stalled. This has led to production losses of over 14,000 vehicles as of April, according to the automaker.

Along with already slow production, orders were reduced.

The automaker has relied on orders from Nissan to produce the Rogue SUV, but the Japanese company has cut orders this year by 40 percent. The Rogue accounted for nearly half of total sales, at around 220,000 units, in 2018.

The Busan-based automaker has outlined plans for future models, such as the compact XM3 crossover, however the labor dispute had raised uncertainty about the development.

Sales at Renault Samsung Motors between January and May this year fell 35.5 percent to 67,158 units from 104,097 units posted in the same period last year. The automaker has revised this year’s production target from 200,000 units to 160,000 units.

“In Korea, wage negotiations come every year. In the United States, they come every three to five years,” said Kim Pil-soo, an automotive engineering professor at Daelim University College. “If such situations continue, the company will continue to face uncertainties in terms of investment and production.”

“Even if the vote for the new deal passes, there are numerous obstacles ahead,” added Kim.

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