Executive Salary Returns Until the End of This Year... Prolonged Pain Sharing in the Car Industry

Kumho Tire Decides to Extend in July
Concerns Over Prolonged Difficulties in Exports

[Asia Economy Reporter Kiho Sung] Kumho Tire has decided to extend the executive salary return program, which began in April to overcome the novel coronavirus infection (COVID-19), until the end of this year. Other completed vehicle manufacturers and auto parts companies that previously participated in the executive salary return are also considering extending the salary return period. As the COVID-19 crisis has prolonged beyond six months, the automotive industry's crisis seems to be becoming normalized.

According to the automotive industry on the 22nd, Kumho Tire recently decided to extend the salary return for executives until the end of this year. In March, Kumho Tire held an emergency management meeting and decided that from April to July, CEO Jeon Dae-jin would return 30% of his salary, and other executives would return 20%, while minimizing costs as much as possible. However, as the COVID-19 situation worsened beyond expectations, they decided to extend this period.

Hyundai Motor Group, whose executives including Vice Chairman Chung Eui-sun have been returning 20% of their salaries since April, has not yet decided on the end date for the salary return. They plan to monitor the situation until the end of this year and respond flexibly. A Hyundai Motor Group official explained, "The executive salary return is still ongoing," adding, "The exact end date is fluid depending on the COVID-19 situation."

Korea GM has also decided to continue its policy, which started in March, of deferring 20% of wages for employees at team leader level and above and cutting 5-10% by rank for the time being. Hankook Tire executives have also been returning 20% of their salaries since May. Both companies initially planned to normalize once the COVID-19 situation improved, but as the crisis has prolonged, they have not been able to decide on the end date for wage deferral and return.

An automotive industry insider said, "As the COVID-19 crisis prolongs, there is a forecast that executive salary returns will continue at least until the end of this year, and possibly beyond the first half of next year," adding, "Especially since the export market centered on the United States is depressed, a quick recovery seems difficult."

However, it is unlikely that the salary return will spread to regular employees. Another automotive industry official explained, "Executive salary returns are possible if executives voluntarily agree," but "regular employees belong to labor unions, so any salary-related matters must be negotiated with the unions."

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