SEOUL Hyundai Motor (005830.KS), South Korea's top automaker, and its staff labor union start annual wage talks on Thursday, with the union calling for temporary workers to get full-time jobs and for an end to overnight shift work.
Eyes are on whether Hyundai Motor, the world's fifth-biggest automaker along with Kia Motors (000270.KS), will manage for a fourth consecutive year to avoid a strike during wage talks, at a time when its inventory is low because of strong demand and tight supply.
"We are facing a slew of labor issues this year," a top Hyundai executive told Reuters, raising concerns about the union leadership, which was elected late last year to replace predecessors who had led the union without a strike for three consecutive years.
He declined to be identified because of sensitivity of the issue.
The labor union calls on Hyundai, the profit margin of which is second to only Germany's BMW, to convert temporary workers into full-timers, which the union says will increase Hyundai's annual labor costs by about 82 billion Korean won ($72.03 million).
"This is not an excessive demand, considering Hyundai's (strong) business performance," the union said in its newspaper.
The union said in-house subcontracted workers accounted for 24 percent of production workers as of 2008, and their monthly wage was 78 percent of what full-time employees earn.
The Hyundai executive said "it does not make sense" to turn all temporary workers into staff. Temporary workers were needed to enhance labor flexibility.
"It is a tricky matter. We will seek to reach an agreement through negotiation," he said.
He said another thorny issue was a union demand to end overnight shift work.
The union calls for an introduction of a two-shift scheme running from early morning to around midnight, from the current system of day and overnight shifts, saying overnight work poses health risks and undermines workers' quality of life.
While Hyundai sees the need to scrap overnight work, it is concerned about a potential loss of production which it would like to make up elsewhere.
Another union demand is a basic salary raise of 8.4 percent or 151,696 won ($133) and bonuses equivalent to 30 percent of Hyundai's 2011 net profit to be paid to workers. Hyundai's net profit jumped 35 percent 8.1 trillion won last year.
Last year, Hyundai Motor and the staff labor union agreed a 93,000 Korean won rise in basic salaries, a performance bonus equivalent to three months' salary plus a 7 million won payment, and 35 company shares per employee.
(Reporting by Hyunjoo Jin; Editing by Eric Meijer)