Kumho to Lay off 706 Employees in September

It is alleged Kumho Tire will lay off 18 per cent of its workforce during September. According to South Korea’s Dong-a Ilbo (East Asia Daily), the tyre maker has filed an application to this effect with the Gwangju Regional Labour Office, and the country’s Labour Ministry stated on August 17 that Kumho will dismiss 706 employees on September 16. In its application, the company cited a number of reasons for its decision, including aggravating business conditions, rising accumulated deficits, and a lower operating rate at its factories due to declining profits. On August 10 Kumho began offering early retirement packages to employees. Only 20 workers have so far applied to take such an offer, however.

The union representing Kumho workers has been fighting for an increase in the basic pay rate of 87,709 won (70 U.S. dollars), negotiations for bonuses for both last year and this year, and a pledge from the company to invest in facilities and raise the competitiveness of domestic factories. Kumho, however, said it will freeze wages, not pay bonuses for last year, and suspend the provision of welfare benefits. It added that layoffs are inevitable if the union continues to reject any compromise. The negotiations between the two parties have made very little progress since May, and strike action began at Kumho’s Korean plants in July.

According to a union statement, layoffs “are an act of shifting the company’s responsibility for management failure to workers.” The union also reported that its emergency committee is discussing other courses of action, including further strike action. In response, Kumho said “we didn’t initially intend to lay off workers, but our patience wore out due to the union’s continuous refusal to reach an agreement.”

Kumho is likely to suffer further disruption of operations as the union will hold elections for its leaders early next month, experts said. The situation could worsen if the Korea Metal Workers’ Union and the Korean Confederation of Trade Union intervene in the dispute.