Kia ordered to pay $374 million in back pay to Korean workers

A South Korean court on Thursday ruled against Kia Motors, ordering the automaker to pay 420 billion won ($374 million) in unpaid wages.
The payout, though significantly less than the roughly 1 trillion demanded by workers, is a blow to South Korean automakers as it will raise labor costs just as they are battling a sales slump in a major market, China.
Shares in Kia Motors were down 3.3 percent and its bigger affiliate Hyundai Motor was 1.4 percent lower after the ruling, while the wider market was flat.
The workers in their claim said regular bonuses should be included as part of base pay used to calculate overtime, compensation for unused annual leave, severance pay and other payments.
The judge at Seoul Central District Court said it was “inappropriate” for Kia to argue that the claim posed a threat to the South Korean economy, Asia’s fourth-largest.
Kia Motors said it disagreed with the decision and was considering an appeal.
The case goes back to an original claim in 2011 of 659 billion won in unpaid wages. With interest it came to more than 1 trillion won.
The South Korean automakers’ association had warned before the ruling that the case could deal a “fatal blow” to the competitiveness of the country’s auto industry, which has been hard hit by geo-strategic tensions on the Korean peninsular.
South Korean firms like Hyundai and Lotte have been battered by Chinese boycotts and regulatory pressure over Seoul’s decision to deploy a U.S. missile defense system to counter threats from nuclear-armed North Korea.
China says the system poses a threat to its national security.
Hyundai Motor — which together with Kia is the world’s No.5 automaker — in July posted its smallest quarterly net profit in five years. Sales from its Chinese factories plummeted 64 percent in April-June alone.
Fuente: Automotive News