* GM, union fail to reach deal, passing deadline for bankruptcy filing
* Board delays decision until Monday
* GM wants wage concessions from labor union, govt funding
* Most thorny issue is job security for nearly 700 workers -union (Recasts, adds comments from Korean government, GM)
SEOUL/DETROIT, April 20 (Reuters) - General Motors' South Korean unit delayed a decision to file for bankruptcy protection until Monday afternoon, after the automaker failed to reach a wage deal with its labor union in time to meet a Friday deadline.
The U.S. automaker shocked South Korea in February when it unveiled a major restructuring plan for its money-losing unit, which involved shuttering one of its four plants in the country and voluntary redundancies for 2,600 workers.
GM has sought wage concessions from the union as well as government funding and incentives to save its remaining three South Korean factories.
The automaker said its Korean unit, which employs 16,000 people, would likely file for bankruptcy if no restructuring agreement was reached by Friday.
After failing to reach a tentative agreement with the company by the deadline, GM Koreas labor union requested an extension to continue talks, aiming to conclude a tentative agreement by 5 p.m. local time on Monday, April 23.
GM Korea held a board meeting on Friday evening to discuss filing for a court-led rehabilitation, but it delayed a decision until Monday evening.
"Government officials will engage in the negotiations over the weekend in an effort to help reach a tentative labor agreement between the company and the union by 5 p.m. Monday," GM said in a statement.
Earlier, the union said the two sides would continue talking until Monday afternoon.
The Korea Development Bank told Reuters this week it may sign a preliminary agreement by April 27 to provide financial support for the business should an interim due-diligence report due on Friday turn out to be satisfactory.
The U.S. automaker owns 77 percent of GM Korea, while KDB owns a 17 percent stake. GM's main Chinese partner, SAIC Motor Corp, controls the remaining 6 percent.
OVER 150,000 JOBS THREATENED
In a statement after talks fell apart on Friday, South Korea's government urged GM Korea and the union to "reach an agreement swiftly through genuine dialogue."
If they fail to reach an agreement, more than 150,000 jobs at GM and suppliers will be "under threat," the government said.
GM Korea's restructuring also poses a challenge for South Korean President Moon Jae-in, who has attached the utmost priority to jobs ahead of local elections scheduled for June.
GM Korea's future is important for South Korea as it accounts for some 13 percent of the nation's auto industry jobs and 16 percent of auto exports in Asia's fourth-biggest economy.
A union official previously said the thorniest issue was job security for 680 workers at the Gunsan factory, which is due to close by May.
"We don't want a disaster. We still have to keep in mind the worst situation," he said prior to the talks, declining to be identified due to the sensitive nature of the talks.
Over the past three years, GM has sought to focus on profitable markets, mainly the United States and China, and new technologies such as electric and automated vehicles.
Although the South Korean unit has been hobbled by labor costs and hurt by GM's decision to pull its Chevrolet brand from Europe, a key export market, any decision on whether to pull the plug on the unit will not come easy for GM Chief Executive Mary Barra.
The unit was once the backbone of its Asian strategy and still makes more than 1 million assembled or partially assembled vehicles for the U.S., European and emerging markets.
It is also an engineering and design source for GM's small vehicles and electric vehicles, as well as home to some of GM's top-ranked suppliers globally. ($1= 1,060.8700 won) (Reporting by Hyunjoo Jin; Additinal reporting by Ju-min Park and Jane Chung in Seoul; Editing by Edwina Gibbs, Muralikumar Anantharaman and Dan Grebler)