[Weekly File] GGM Union Stages First Strike in Five Years Since Corporation's Establishment

7% Wage Increase and Seniority-Based Pay Demanded
Further Raises Difficult Under Coexistence Agreement
Production Volume Expected to Take a Hit This Year
Concerns Over Possible Breach of Duty if Union Demands Are Accepted

The Gwangju Global Motors Branch of the National Metal Workers' Union (GGM Union) launched its first full-scale strike on the afternoon of the 10th, five years after the establishment of the GGM corporation, holding a strike declaration press conference in front of Gwangju City Hall. Photo by Min Chanki

The Gwangju Global Motors branch of the Korean Metal Workers' Union (GGM Union) has officially launched its first strike, five years after the establishment of the GGM corporation. As GGM, which was launched as a mutually beneficial job creation project based on a labor-management-government-civil society agreement, enters its first strike, there is criticism that the original purpose of its founding is being undermined.

Although the company planned to significantly increase Casper production this year by hiring a large number of employees and implementing a two-shift system based on last year's sales performance, prolonged negotiations with the union have raised concerns about potential damage to the local economy.

◇ First Strike in 3 Years and 4 Months Since Establishment

The GGM Union's strike officially began at 12:20 p.m. on the 10th. According to the Korean Metal Workers' Union Gwangju-Jeonnam branch, about 20 executive members of the GGM Union started a partial strike from 12:20 p.m. to 4:20 p.m. for four hours. From next week, union members will take part in a rotating strike, with the detailed schedule to be decided by the strike countermeasure committee.

After the strike began, GGM Union executives immediately moved to Gwangju City Hall to hold a press conference announcing the strike.

The union stated, "The reason the union is striking is because the employer, Gwangju City, and shareholders have abandoned the path of 'coexistence' and continue to suppress the union," adding, "If the coexistence agreement was intended to prohibit unions and strikes, it is an anti-constitutional agreement that tramples on the three basic labor rights and is therefore invalid."

They continued, "On the 6th, when the union put up a banner on the parking lot wall calling for sincere negotiations and union solidarity, management removed it without permission within a day. On the 8th, during a campaign urging collective bargaining, the head of the coexistence and safety office mobilized a large number of employees to interfere by force," emphasizing, "If the employer's attitude does not fundamentally change, this struggle could last at least a year or more."

On this day, the union called for an end to union suppression and genuine negotiations, including demands for full-time union officials and an office space. GGM workers began full-fledged union activities after joining the Korean Metal Workers' Union in May last year. It is reported that about 200 out of 600 employees are currently union members.

Previously, since October last year, the GGM Union had held eight rounds of negotiations with management, demanding a 7% (KRW 159,200) monthly wage increase, a 300% bonus, the introduction of a seniority-based pay system, and guarantees for free union activities, but talks broke down.

Management maintains that, in line with the labor-management-government-civil society agreement that formed the basis of the company, wages were increased by the inflation rate (3.6%) early last year, and further increases are not feasible.

◇ What is the Coexistence Development Agreement?

GGM is a company that produces the Hyundai Casper, a compact SUV. GGM was launched to provide high-quality jobs for local youth.

In January 2019, the Gwangju Labor-Management-Government-Civil Society Council resolved to establish a complete vehicle factory as part of the Gwangju-type labor-management coexistence model and adopted the 'Labor-Management Coexistence Development Agreement' to achieve the common goal of regional development. As a result, GGM was founded in September of the same year. However, since the agreement is a promise among labor, management, government, and civil society, it does not have legal binding force.

With the adoption of the agreement, Hyundai Motor Company, Gwangju Green Car Promotion Agency, Gwangju Bank, and other regional financial institutions and companies signed investment agreements. The agreement contains core corporate values and standards such as appropriate wages, appropriate labor, and transparent management.

According to the agreement, the average starting salary for all employees is set at KRW 35 million based on a 44-hour workweek, with provisions to enhance collective welfare, such as housing support, commuter bus service, and workplace daycare. In particular, until production reaches 350,000 units, all issues are to be discussed and resolved through the coexistence council, clearly stating the principle of 'coexistence.'

It is analyzed that this agreement has led to continuous corporate investment in GGM and allowed the company to secure contract production volumes from clients.

◇ Actual Wage Levels and Job Creation at GGM

Currently, GGM employs about 680 people. As of last year, the average annual salary for first-year technical employees, including social support such as housing subsidies provided by Gwangju City, was KRW 42.1 million. Excluding social support, it is estimated at around KRW 38.4 million.

The average wage is also rising rapidly. As of 2023, the average wage excluding social support was KRW 48.14 million, and including social support, it was KRW 49.94 million. The average wage increased by 13% in just one year, attributed to a 3.6% regular wage increase (inflation rate) and a 7.4% increase in overtime and special work.

GGM is also very popular among local youth. In the open recruitment held in September last year for 46 positions, 1,021 people applied, resulting in a competition ratio of 22:1. The competition for general positions was highest at 53:1, and for technical positions, it was 16.6:1.

◇ GGM's Growth Extending Worldwide

The Casper EV produced by GGM is recording overwhelming sales. According to Danawa Auto, an automotive information service by Connectwave, Casper EV's domestic sales reached 1,439 units in August, 2,075 units in September, 2,186 units in October, and 1,731 units in November last year, totaling 7,431 units. During the same period, the only electric vehicle that sold more than the Casper EV was Kia's EV3 (10,415 units).

As of the end of December last year, cumulative production reached 160,000 units. With the recent increase in Casper EV exports, GGM is raising the proportion of overseas shipments. As of the end of December last year, Casper EV had been exported to 64 countries worldwide, including Europe, Japan, Australia, and New Zealand, totaling 10,600 units.

GGM expects to produce 56,800 units of Casper, including the EV, this year, a 7% increase from last year. Of these, exports are expected to reach 42,900 units, a 304% increase from last year. Based on these production results, GGM believes it will be able to meet the 350,000-unit production target specified in the coexistence agreement by 2027.

However, GGM originally planned to hire an additional 300 production workers and switch from the current daytime single-shift system to a two-shift system. This plan has been blocked by union opposition to the two-shift system, so the company is monitoring sales for the time being.

◇ Local Business Community Expresses Concern Over Labor Dispute

The 36 GGM shareholders have expressed concern over the breakdown of wage and collective bargaining negotiations and warned of a strong response if the union goes on strike.

At a press conference at the Gwangju City Council on December 26 last year, the shareholders stated, "This situation is a serious issue that threatens the local economy and youth employment," adding, "Labor-management-government-civil society council procedures must be used to resolve the conflict. If the operation of the company suffers serious damage due to union strikes and other actions, we will take strong measures such as legal action and withdrawal of investment shares."

The problem is that if management accepts the union's demands, GGM executives could be implicated in breach of fiduciary duty. To meet the union's demands, management would have to violate the GGM bylaws, which require management based on the coexistence development agreement, and responsibility for this would fall on the executives, including the CEO.

Attorney A stated, "Breach of fiduciary duty is a crime committed by a person entrusted with another's business when they act against their duty and cause loss," adding, "If the criteria for wage increases set out in the coexistence development agreement and reflected in the bylaws are exceeded solely on the grounds of union demands, there is a possibility that management could be found guilty of breach of fiduciary duty."

A GGM official explained, "We recently sent an official letter to the union stating that we are ready to resume negotiations at any time," adding, "GGM has a unique structure in which the shareholders, by delegation under the coexistence agreement, are engaged in disputes with the union. Since the executives' terms are limited to two years, accepting the union's demands could constitute a breach of duty."