Daewoo unions bow to pressure

Daewoo factories stopped production earlier this month

Unions at the South Korean auto giant Daewoo Motors have bowed to pressure to agree to a company restructuring.

But it is still unclear if the union has agreed to job cuts.

Union agreement to job cuts is necessary for the courts to agree to appoint an administrator to turn the company around.

Nearly 6,000 non-union employees have already agreed to tender their resignation.

This helps pave the way for creditors to make fresh loans and for the court to approve a receivership application.

Daewoo was one of Asia's biggest car producers

Union members were to meet later on Monday to discuss the company's proposals.

"At the moment it is not clear whether the union has accepted a job reduction plan, in which the company wants to cut 3,500 jobs," said C.W Lee, a spokesman for Daewoo Motor.

"All 5,700 non-union employees of Daewoo Motor will submit their resignation by Tuesday in the hopes of saving the company through restructuring," he added.

Restructuring plan

Separately, the Inchon District Civil Court has asked Daewoo to notify the court by Tuesday whether unions and management would accept a restructuring plan, involving job cuts.

Up until now, unions have rejected plans to cut jobs, saying the problems at Daewoo stemmed from management, creditors and the government.

The company applied for court receivership on 10 November, after the creditors cut fresh funding.

The court is now expected to make its decision early next week.

The Korean Development Bank, Daewoo Motor's main creditor, say fresh funding depends on unions' agreement to job cuts.

The future of the company has been in doubt, since its talks with US car company Ford collapsed earlier this year.