Disputes with temporary workers add to GM Korea's challenges

BUPYEONG, South Korea (Reuters) - Having lost his temporary job as a mechanist at GM Korea twice in the past eight years, Shin Hyun-chang was eagerly awaiting a court ruling last month on whether the automaker would be forced to recognize him as a full-time employee.

Shin Hyun-chang, who used to work at an engine line in GM Korea's Bupyeong plant, smokes a cigarette outside the plant in Incheon, South Korea March 12, 2018. Picture taken March 12, 2018. REUTERS/Kim Hong-Ji

While the Feb. 13 verdict came out in favor of Shin and 44 temporary co-workers, there were no big celebrations: Earlier that day, Detroit-based General Motors GM.N had suddenly announced it was shutting one of its South Korean plants with the loss of 2,000 jobs and was reviewing the future of its remaining three factories.

“I asked myself ‘why is my life so gloomy? Nothing is going right’,” Shin told Reuters at a protest tent set up outside the Bupyeong GM factories in the suburbs of Seoul.

“I moved one step closer to achieving my goal of becoming a regular worker, but the jobs that can help me get there may disappear soon.”

Shin said he was one of 600 temporary workers at GM Korea fired since December via a mobile phone message and without any severance package.

GM Korea has appealed the Feb. 13 ruling that GM Korea should recognize the temporary workers as full-time employees, and Shin and his co-workers have not been reinstated, court documents show.

The legal battle adds to challenges for the automaker as it works through difficult restructuring negotiations with the government, shareholders and unions and as some 1,600 jittery temporary workers still on GM Korea’s payroll worry they will be hardest hit.

“We are concerned that the litigation could add to the labor cost burden,” a GM Korea spokesman told Reuters. “We will continuously discuss the structural cost issues with the labor union during ongoing wage negotiations.”

GM Korea’s principle was “to flexibly manage subcontracting deals according to production plans,” he added.

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The use of temporary workers by automakers around the world is commonplace, but in South Korea, where laying off full-time and unionised workers is particularly difficult, GM Korea and local peers such as Hyundai Motor Co 005380.KS have turned to temporary workers to a greater extent.

Temporary workers account for 22 percent of the total workforce in South Korea, second only to Spain among Organization for Economic Co-operation and Development member states and double the OECD average.

Temporary auto factory workers do similar work to regular workers, but get paid only 50 to 60 percent of full-time employees’ salary, said Jung Heung-jun, a researcher at state-funded Korea Labor Institute. That is far lower than the 80 to 90 percent temporary auto workers overseas receive, he said.

With GM Korea’s production expected to fall by a quarter to just 42 percent of its peak production next year, according to an internal company forecast seen by Reuters, more temporary jobs are likely to be affected.

“Whenever crisis comes, we are the ones removed first,” said Hwang Ho-in, a forklift truck driver at GM’s Bupyeong plant, who joined protesting workers spending freezing winter nights camped outside the plant in makeshift shelters, sustained by instant cup noodles and bottled water.

Outside the tent a banner reads, “The Moon Jae-in government! Are you going to just watch massive lay-offs at GM Korea?”


South Korea’s President Moon, who took office last May, had pledged to provide better job security for temporary workers, promising to encourage companies to change the status of temporary workers into full-time employees.

However, officials say the government faces resistance from businesses and conservative politicians worried about rising labor costs.

“People can blame GM’s firing of temp workers on moral grounds, but not on legal reasons,” a government official told Reuters, on condition of anonymity because he is not authorized to talk to the media.

“Without legal grounds, the government can’t pressure the private sector,” the official said.

While temporary workers get no severance packages, GM Korea’s 2,500 regular employees who signed up for voluntary redundancy scheme earlier this month will get three times their annual base salary, their children’s college tuition fees paid and a $9,000 voucher towards a new car.

The number of subcontracted or dispatched workers at GM’s Bupyeong plant slumped by 58 percent in 2017 versus 2014, compared to just 5 percent for regular workers, according to South Korea’s labor ministry data.

Amid fears over further layoffs, temporary workers at GM are now losing hope.

“What we want first is to keep our jobs, rather than becoming regular workers or not,” said a frustrated Shin.

(For a graphic on 'GM Korea temporary workers' click

(For a graphic on 'Temporary workers in OECD countries' click

Reporting by Hyunjoo Jin and Ju-min Park; Editing by Miyoung Kim and Lincoln Feast