Gwangju Global Motors (GGM), the flagship company of the Gwangju Job Project, is on the verge of industrial action. GGM, founded in 2019 as part of a broader labor-management-public sector-government compromise to ensure production without strikes in exchange for moderate wages, is now at the center of a heated wage dispute that has exposed tensions between labor and management.
The Jinowi, short for the Jeolla Province Labor Relations Commission, was asked to intervene in the ongoing labor dispute at GGM on Oct. 17. The two sides are deeply divided on wages and collective bargaining, leading to the request for mediation. Although the commission’s recommendation for “weekly negotiations” has temporarily delayed a strike, tensions remain high as the two parties are far from reaching an agreement on wage increases and other demands.
Earlier this month, a union-led strike vote saw 85.97% of workers in favor of industrial action. The union has reportedly submitted over 200 demands, including a significant wage hike.
Concerns that GGM’s business model, centered around creating jobs through moderate wages, is beginning to crumble have emerged. Launched under the Moon Jae-in administration, the GGM was hailed as a blueprint for labor-management cooperation. But the business model has been under scrutiny as dissatisfaction over low wages has been mounting among workers.
GGM workers earn an average annual salary of around 35 million won ($26,000), one of the lowest in the automotive industry. By comparison, the average wage of Hyundai and Kia workers is around 100 million won. GGM workers have long voiced frustration over the wage gap, arguing that they produce similar vehicles yet receive far less compensation. To address these disparities, the local government had pledged an additional 7 million won in “social wages,” including housing support, but much of that promise has only been partially fulfilled.
The likelihood of a strike at GGM remains high as both sides continue to clash over wage increases and the no-strike promise. The company insists that the no-union, no-strike agreement was clearly outlined in the GGM investment agreement, which was the core of the labor-management-public sector-government compromise, and that wage increases should reflect inflation rates. The union, however, argues that the “no-union, no-strike” condition goes beyond legal requirements and is non-binding because it was not explicitly mentioned in the agreement.
Documents obtained by the Chosunilbo reveal that GGM committed to forming a labor management council to handle labor issues until the factory reached a production milestone of 350,000 units. GGM claims this provision implies the “no union, no strike” condition as labor-related issues would be discussed through the council instead of a union. As of last year, GGM has produced 110,000 units, mainly the Hyundai Casper model.
“We couldn’t explicitly state ‘no union’ in the agreement, so we mentioned the labor management council instead,” said a source familiar with the matter. Experts believe that without this condition, Hyundai would not have considered investing in GGM.
Regarding wages, the investment agreement specifies that the starting salary for all workers would be 35 million won, based on a 44-hour workweek, and that wage increases would follow the consumer price inflation rate.
However, the two sides are divided on whether this provision is valid. The issue lies in the agreement being a non-binding, so-called “gentleman’s agreement” between labor, management, the public sector, and the government rather than a legally enforceable contract. Labor groups, including the Korean Confederation of Trade Unions, argue that the Gwangju Job Project violates the constitutional right to unionize and strike.
☞Gwangju Job Project
Launched during the Moon Jae-in administration, the Gwangju Job Project is a regional job creation model designed to attract corporate investment by offering relatively lower wages. Instead of forming traditional unions, the project established a labor-management council to address labor issues such as wage negotiations. However, workers have expressed dissatisfaction with the low wages and working conditions associated with the project.
