Renault Samsung Labor and Management Reach Tentative Agreement on 2019 Wage Negotiations After 7 Months: "Shared Understanding of COVID-19 Crisis" (Comprehensive)

Temporary Compensation of 8.88 Million KRW to Be Paid Instead of Base Salary Freeze
Focus on New XM3 Production... Export Volume Allocation Also Becomes More Favorable

Renault Samsung Busan Plant (Photo by Yonhap News)

[Asia Economy Reporter Kim Ji-hee] Renault Samsung Motors' labor and management have reached a tentative agreement on the 2019 wage negotiations. Both sides had been in conflict for seven months, repeating strikes and workplace lockouts since their first meeting in September last year, but it appears they have recently formed a consensus on the need to cooperate to overcome the crisis caused by the novel coronavirus disease (COVID-19) situation.

Renault Samsung announced that at the 19th wage negotiation session held on the 10th with the company's main union, the Enterprise Union, they prepared a tentative agreement on last year's wage negotiations. The tentative agreement centers on freezing the base salary while providing a total one-time compensation of 8.88 million KRW, including a 2 million KRW compensation incentive and 2.58 million KRW already paid as part of the Profit Sharing System (PS). Additionally, a new contribution allowance was established, paying 5% of the monthly bonus base amount (a fixed average annual increase of 1.2 million KRW in fixed pay). Renault Samsung explained that the introduction of the contribution allowance, along with a 4.7% increase in the regular hourly wage, will have the effect of increasing personal and retirement pensions.

Furthermore, Renault Samsung's labor and management agreed to establish a joint social contribution fund to share the difficulties faced by the local community due to COVID-19. This tentative agreement will be finalized at a general meeting of employees after an explanatory session for union members. The schedule for the general meeting is yet to be determined.

Renault Samsung's labor and management have been negotiating the 2019 wage agreement since September last year, extending into the new year. The union has been advocating for wage increases and improvements in employee compensation and treatment, while management has emphasized the need to strengthen the competitiveness of the Busan plant to secure new export volumes.

However, as the COVID-19 crisis has spread a sense of emergency throughout the global automotive industry, it seems both sides have dramatically found common ground. They agreed on the necessity to promptly secure future volumes through boosting domestic sales and improving manufacturing competitiveness.

With the labor-management conflict that had continued into the new year overcoming a major hurdle, Renault Samsung can now take a breather. Above all, the company is now able to focus on producing the new XM3 model, which has recently gained high popularity domestically. Furthermore, by leveraging a stable labor-management relationship, it is expected to gain a favorable position in securing export volumes of new vehicles.

This content was produced with the assistance of AI translation services.