KIA Motors Corporation’s provisional agreement with the company’s labour union includes an 8.8% wage increase and the introduction of a 40-hour working week, to take effect from September 1. Management also agreed to a revised performance-based bonus schedule and to improved wage conditions for temporary employees while the union has undertaken to increase productivity to ensure that production targets continue to be met. The union has dropped its demands for inclusion in the management decision-making process, in exchange for assurances that employee stability would be a top priority in any future Kia investment plans.

Kia also agreed to provide workers with advanced notification of new vehicle development and to increase R&D spending.

Kia COO Yong-Hwan Kim said: “The agreement under discussion, brings conditions for Kia’s workforce more closely in-line with our sister company, Hyundai Motor. We are pleased that negotiations with the labour union have led to a decision that is acceptable to both sides.”

Unlike most USA and European vehicle manufacturers, Kia Motors Corporation negotiates with its labour union annually. Kim emphasised that both production and profit targets for Kia in 2003 remain attainable.

“Due to our traditional annual cycle, we allow for a certain amount of disruption around mid-year, when setting our targets. 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 during 2003 remains unchanged,” added Kim.

In recent months, work stoppages at Kia plants in Korea have caused a production deficit of around 35,000 vehicles to accumulate.

The final agreement is subject to approval by members of the labour union, who will vote on the proposals on August 28.