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🇰🇷 South Korea /Economy & Trade

GM Korea Union Alleges Dividend Plan Signals Withdrawal

From Hankyoreh · (11h ago) Korean Critical tone

Translated from Korean, summarized and contextualized by DistantNews.

TLDR

  • The Korean Metal Workers' Union GM Korea branch suspects GM's proposed interim dividend is a precursor to withdrawing operations from South Korea.
  • Union leader Ahn Gyu-baek stated the dividend would allow GM headquarters to recoup nearly all of its 2018 investment, raising concerns about a potential exit strategy.
  • The union criticized the Korea Development Bank, a major shareholder, for potentially approving the dividend based solely on economic logic, ignoring the company's social responsibilities and past public investment.

GM Korea's labor union has voiced strong suspicions that the company's move towards an interim dividend is a calculated step towards a potential withdrawal from the South Korean market. Ahn Gyu-baek, the head of the GM Korea branch of the Korean Metal Workers' Union, articulated this concern, suggesting that the dividend would enable GM headquarters to recoup a significant portion of its 2018 investment.

At this point, we cannot help but see it as a behind-the-scenes operation for withdrawal.

— Ahn Gyu-baek, Head of the GM Korea Branch of the Korean Metal Workers' UnionExpressing the union's suspicion that the interim dividend is a step towards GM's withdrawal from South Korea.

The union's apprehension is rooted in historical patterns observed in other countries where GM has operated. Citing examples from Australia, India, and Europe, Ahn pointed out that GM has previously restructured and exited markets after shifting factories from chronic deficits to profitability and subsequently distributing dividends. This historical context fuels the union's fear that South Korea might be following a similar trajectory.

Isn't it a concept of recovering the amount invested in 2018?

— Ahn Gyu-baek, Head of the GM Korea Branch of the Korean Metal Workers' UnionQuestioning the purpose of the interim dividend in relation to GM's past investment.

Adding to the union's criticism is the perceived inaction of the Korea Development Bank (KDB), a significant shareholder in GM Korea. The union argues that KDB, having been a key negotiator during GM's restructuring in 2018 and a recipient of substantial public funds, should not solely evaluate the dividend proposal through an economic lens. They believe KDB has a responsibility to consider the broader implications for labor and the national economy.

In such countries, they intentionally depressed domestic demand at first, turned factories that were chronically in deficit into profitable ones, and then paid dividends. After that, they underwent restructuring and withdrew.

— Ahn Gyu-baek, Head of the GM Korea Branch of the Korean Metal Workers' UnionCiting historical examples of GM's market exits.

The union's stance is further amplified by the recent issue of unpaid severance pay for subcontracted workers, highlighting a perceived disconnect between the company's financial distributions to its parent entity and its obligations to its workforce. This situation underscores the union's demand for GM Korea to uphold its social responsibilities alongside its financial objectives, particularly given the history of public investment in the company.

The Korea Development Bank cannot be the same as a general investment bank. It was one of the key parties that negotiated with GM headquarters in 2018, and a considerable amount of public funds have already been invested. It is critical whether the dividend should be accepted solely on economic logic.

— Ahn Gyu-baek, Head of the GM Korea Branch of the Korean Metal Workers' UnionCriticizing the KDB's potential oversight of the dividend decision.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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