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JULY 7, 2003
South Korea: Can Roh Handle a Summer of Strikes? A summer of discontent is brewing in South Korea, presenting President Roh Moo Hyun with what may turn out to be his biggest domestic political challenge since his February inauguration. Just a few days after Roh's government intervened to end an illegal strike that sparked a panicky run on the country's fifth-largest bank, some 10,000 workers at Hyundai Motor Co. walked off the job for four hours on June 25. That stoppage is expected to be followed by an all-out strike starting on July 2, for a shorter workweek, higher wages, and other demands. "We will fight a proxy war with company management," declares Chang Kyu Ho, a leader of Hyundai Motor Union. Summer is the season for wage bargaining in South Korea, but the level of labor tension is far greater than at any time in recent years. Railway workers, bus and taxi drivers, and shipbuilders are all contemplating walkouts in coming weeks. The unions sense weakness in the inexperienced President, who has publicly expressed helplessness in dealing with the pressures of his office. How Roh handles the strikes could determine whether he is seen as an effective leader -- or as hopelessly lost amid demands of competing groups. Other special interests, from farmers to environmentalists, are watching the President's response as "a litmus test," says Choi Kyung Soo, a fellow at Korea Development Institute, a state-funded think tank. Businesspeople fear that if Roh fails to contain the labor unrest, other disgruntled groups will take to the streets. That would exacerbate a mounting sense of crisis and further damage the economy, which contracted 0.4% in the first three months of this year. "Labor militancy discourages businessmen from making fresh investments," says Yoon Byung Chul, chairman of Seoul-based Woori Finance Holding Co. He heads a group of 170 bankers, businesspeople, and scholars who recently issued a statement warning of the dangers of social conflict. On June 23, five Big Business lobbying groups also issued a statement saying that companies "will have no choice but to relocate bases to places where we can secure competitiveness" if the business climate deteriorates further. In other words, they might move manufacturing to China. So all eyes are on Roh. The former human-rights lawyer has vowed to uphold the country's labor laws, which require unions to give 10 to 15 days notice before striking and allow workers to strike only over wages and working conditions. The trouble is that there are gray areas, and Roh's instinct is to intervene to carve out deals between management and unions, as he has done already for striking truckers, railway workers, and teachers' unions. Such interference is anathema to management. To end a two-month strike at power-equipment maker Doosan Heavy Industries & Construction, for example, Roh's government pressed the company to pay striking workers -- a reversal of no-work, no-pay principles that are enshrined in the labor law. "Such an approach gives a wrong signal to unions," says Seoul National University labor economist Kim Dae Il. The question is whether rising labor tension will spur Roh to take a harder line with the unions, which backed him strongly in his presidential bid. The betting in Seoul is probably not, particularly since Roh needs to gain support for his Millennium Democratic Party in advance of National Assembly elections next spring. A lukewarm response to strikes may win him union votes, but if South Korea's competitiveness deteriorates, the cost of equivocation could be more than the country can afford.  By Moon Ihlwan in Seoul Edited by Rose Brady Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | |
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