- Management agrees 8.8% wage increase
- Kia remains on track to meet 2003 profit and production targets
SEOUL 26 August 2003 - Kia Motors has reached a tentative agreement with the company`s labour union after a marathon negotiating session that lasted until the early hours of this morning.
The terms of the agreement include an 8.8% wage increase and the implementation of a 40 hour work week to take effect from September 1 this year.
Management also agreed to a revised performance-based bonus schedule and improved wage conditions for temporary workers.
Labour has undertaken to increase productivity to ensure that production targets continue to be met.
Labour dropped its demands for inclusion in management decisions in exchange for assurances that employee stability would be a top priority in any future investment plans. Management also agreed to provide labour with advance notification of new vehicle development and to increase R&D spending.
Kia COO Yong-Hwan Kim said, "The agreement on the table brings conditions for Kia`s workforce more closely in line with our sister company, Hyundai Motor. We are obviously pleased that negotiations have led to a decision acceptable by both sides."
The final agreement is subject to approval by the union members, who will vote on the proposal on August 28.
Unlike most U.S. and European manufacturers, Kia Motors negotiates with its labour union annually. Mr. Kim emphasizes that profit and production targets for 2003 remain attainable. "We allow for a certain amount of disruption around the middle of the year when we set our annual targets," he said. "We have received assurances from labour that lost production will be made up as soon as possible and our production target of 1,234,000 vehicles for 2003 is unchanged."
Work stoppages caused a production deficit of around 35,000 vehicles costing an estimated W520 billion (approx $445 million).
Standard and Poor`s upgraded Kia`s credit rating to BB+ with a positive outlook in the opening days of the labour action.
Founded in 1944, Kia Motors Corporation (www.kiamotor.com) is Korea`s oldest manufacturer of automobiles. A part of the Hyundai Automobile Group, the company currently sells more than one million vehicles per year worldwide and maintains a network of distributors that covers 190 countries. Kia Motors is the major sponsor of the Australian Tennis Open and the international sponsor of the Davis Cup for the Euro/Africa zone.