SsangYong Motor and its union agree on cost cuts

Home > Business > Industry

print dictionary print

SsangYong Motor and its union agree on cost cuts

SsangYong Motor and its labor union agreed on a turnaround plan that involves veteran workers taking partially paid leaves on rotation and reduced health benefits after the automaker posted net losses for 10 consecutive quarters, the company said Friday.

The automaker, roughly 75 percent owned by India’s Mahindra & Mahindra, went into the red in the first quarter of 2017. In the second quarter of this year, the company posted a net loss of 51.5 billion won ($43.29 million) almost double its 26.1 billion won loss in the first quarter of the year.

SsangYong and the union have been discussing a turnaround plan since Sept. 3, the company said.

Under the agreed plan, workers with 25 years of continuous service will have to take enforced leaves.

The Korea Economic Daily reported Thursday that those workers are likely to be ordered to leave for six months and will be able to extend the period for six months on request. The report said workers will get roughly 70 percent of their original salary during the leaves.

A SsangYong spokesperson, however, said the details of the leaves haven’t been fixed yet.

The automaker and the union also decided on reduction of other perks including gifts to employees on national holidays. Some 22 kinds of employee benefits including medical reimbursement and tuition support for children of employees will be reduced.

Last month, the company reduced the number of executive-level employees by 20 percent and cut wages of the remaining executives by 10 percent. Industry sources said the company may let go of more executives.

“Unlike incidents where labor unions and companies fight, we believe our moves will be a good example of labor and management cooperating to tackle business difficulties,” the company said in statement.

While the automaker has been depending a lot on the success of its compact SUV Tivoli, the compact SUV market has become increasingly competitive with the launch of Hyundai Motor’s Venue SUV and Kia Motors’ Seltos SUV earlier this year. While Tivoli has been the top seller in the segment, its ranking slid down to fourth after the Seltos, Venue and Hyundai’s Kona SUV in the domestic market in August.

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now