The judgement to pay workers comes hot on the heels of the brand experiencing sales drop in the Chinese market
Kia was ordered to pay 420 billion won (374 million USD) in unpaid wages by a South Korean court. It was sustainably lesser than what the 1 trillion demanded by workers though. The order comes at the time when the brand is fighting to get back on sales loss endured in one of its significant markets, China. The impact of the ruling was Kia Motors’ shares going down by 3.3 percent while its parental company Hyundai Motor saw it dipping by 1.4 percent.
Workers claims that the regular bonuses shouldn’t be included into their base pay for calculating overtime, severance pay, compensation of unused annual leave and other related payments. Kia argued that the claim would threaten the economy of its country, which is the fourth largest in the continent, but the judge’s verdict said that it was highly inappropriate. Kia will be appealing against the verdict and is strongly in discontent.
The case dates back to over six years as the initial claim made in 2011 for unpaid wages cumulated with interest to a total of more than 1 trillion won. The association of the South Korean manufacturers earlier warned of the dire consequences before the ruling that could potentially end in a calamity. It is said to be a major blow for the country’s competiveness in the automobile sector amidst facing geo-strategic problems in the Korean peninsula.
The decision of Seoul to deploy a US missile defense system for countering nuclear threats from neighbor North Korea resulted in Chinese boycotts and regulatory pressure for companies like Lotte and Kia’s owner Hyundai. The Chinese argue that it is a big issue regarding its national security. The court verdict comes on the back of Hyundai and Kia encountering very least quarterly profit in the last half a decade back in July. The Chinese sales dip by up to 64 percent in the period between April and June 2017.