Kia Motors Corp., South Korea`s second-largest carmaker, said Thursday it will suspend overtime work at its domestic plants starting next week to cut labor costs amid sluggish sales particularly from China. The carmaker also said it will minimize holiday or weekend work except under special circumstances.

The decision was made in connection with a local court’s ruling last month that fixed bonuses and meal allowances should be part of ordinary wages and the carmaker should pay overdue wages of 422 billion won ($371 million), nearly 40 percent of what its union workers had requested.

Under the court ruling, the company has to pay higher overtime, severance and other payments for its workers, while factoring in a one-time loss reserve of 1 trillion won in its financial statement.

Kia Motors downsized its two-shift work scheme to eight hours in daytime and eight + 1 hours at night in 2013, and further modified it this year to eight hours both in daytime and at night, leaving 30 minutes each as overtime.

The halt to the overtime work will affect a total of 40,000 cars a year and help the carmaker save more than 30 billion won in wages, but the average wage loss would be up to 1 million won per employee a year.

The decision is also worrisome to many parts suppliers whose operations purely rely on the output of Kia Motors.

By Lee Seung-hoon

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