Hungary Suspends Hankook

by Houston Chronicle

The government has suspended payment of a training subsidy of 143 million forints ($820,000) to the Hungarian factory of South Korea's Hankook Tire Co. after the company was fined for labor code violations.

Hankook has been fined a total of around 100,000 euros ($150,000) in the past few months, once for illegally employing 32 South Korean workers at its car tire plant in Dunaujvaros, central Hungary, and earlier for making employees work longer hours than allowed by Hungarian regulations.

"Hankook may start claiming the subsidy again when it is found to comply with the labor rules," Social and Labor Affairs Ministry spokeswoman Edit Schranz said.

A contract made public recently showed that in 2005 Hungary pledged Hankook more than 60 million euros ($89 million) forints in cash subsidies to set up a car tire plant, as well as years of tax breaks.

Last year, the European Commission approved Hungarian subsidies to Hankook totaling 92.6 million euros ($143 million), saying they were needed to help develop a disadvantaged region.

Hankook's labor problems _ which also included claims by employees in local media that the company refused overtime payments and illegally dismissed workers trying to set up a labor union _ were addressed during a visit to Hungary in September by South Korean Prime Minister Prime Minister Han Duck-soo.

"Hankook will fully comply with the laws and regulations of Hungary," Han said after a meeting with Prime Minister Ferenc Gyurcsany, saying the problems would be overcome after a "period of adaptation."