Renault Samsung Resolves Labor Dispute After 7 Months, Focuses on Attracting New Export Models

[Asia Economy Reporter Su-yeon Woo] Renault Samsung Motors labor and management have reached a tentative agreement on the 2019 wage negotiations after seven months. Having barely resolved the conflict that has continued since last year, the remaining task is for both sides to unite and focus all efforts on recovering production with new export vehicles.

Renault Samsung labor and management succeeded in preparing a tentative agreement during the 19th wage negotiation session held on the afternoon of the 10th. The wage negotiations, which began with a preliminary meeting in September last year, lasted for a full seven months. The tentative agreement will be decided through a union member briefing session followed by a general employee meeting.

The main points of the 2019 tentative wage agreement include a freeze on base pay, a compensation incentive of 2 million KRW, a total one-time compensation payment of 8.88 million KRW (including 2.58 million KRW already paid under the profit-sharing system), and the establishment of a contribution allowance that pays 5% of the monthly bonus base (an average fixed pay increase of 1.2 million KRW annually). In particular, the introduction of the contribution allowance results in a 4.7% increase in the regular hourly wage along with increased personal and retirement pension benefits.

Renault Samsung Busan Plant / Photo by Yonhap News

Until now, the union has insisted on a base pay increase and improved employee treatment, while management has maintained that freezing the base pay is inevitable to strengthen competitiveness for securing new export volumes.

Although the two sides were at a stalemate for seven months, fatigue from ongoing strikes since last year and a shared understanding of the global automotive industry's crisis due to the novel coronavirus disease (COVID-19) appear to have contributed to reaching an agreement.

After the final confirmation of the tentative agreement, labor and management are expected to unite to first resolve the task of 'securing new export vehicles.' Renault Samsung's Busan plant has secured domestic production volumes for the new Sports Utility Vehicle (SUV) XM3, but the order for export volumes remains uncertain. Renault headquarters has hesitated to assign new vehicles due to concerns about production stability at the Busan plant caused by strikes.

Until last year, the Nissan Rogue, which accounted for more than half of Renault Samsung Busan plant's exports, had its export production consignment period end in March this year. Aligning with Japan’s fiscal year ending in March, the remaining volumes were cleared by March, and from April, only two models, the QM6 and Twizy, remain for export production. Nissan Rogue exports from Renault Samsung in the first quarter of this year were recorded at 4,563 units, a 74% decrease compared to the previous year.

With the reduction in export consignment volumes, Renault Samsung's hourly production rate has also sharply declined. Even if the COVID-19 issue resolves and production normalizes, it seems difficult to immediately recover operating rates without vehicles to produce. Therefore, Renault Samsung labor and management are expected to launch an all-out effort to secure new export vehicles.

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