International Business: South Korea
Korean Labor Isn't Playing Dead Anymore
With the economy hot, unions are out to quash Kim's reforms
South Korea's powerful labor unions have shown remarkable restraint since Asia's economic crisis struck the nation in 1997. As a result, the government has been able to enact sweeping reforms that not long ago would have sent throngs of aggrieved workers into the streets.
Now the truce seems to be unraveling. The country's top labor groups have vowed to go on a nationwide strike, starting May 31. The aim: to press the administration of President Kim Dae Jung to abandon corporate auctions and privatizations that will throw thousands more out of work. "Everyone is talking about the end of the crisis," says Dan Byung Ho, chief of the militant, 570,000-strong Korean Confederation of Trade Unions (KCTU). "So the suffering and sacrifices of the workers must be over."
Well, not exactly. While the economy grew an impressive 10.7% last year, the recovery is uneven. Many Korean companies are too sick to weather internal or external shocks. Some won't survive without capital infusions. Last year, foreign investors committed a record $15.5 billion, nearly double 1998's level. Little would spook investors more than the spectacle of workers clashing with riot police. Based on Korea's cantankerous labor history, investors know authorities would be hard-pressed to keep reforming in the face of mass revolt.
No one understands this better than President Kim, who soon after taking office in 1998 capitalized on his status as an ex-dissident to get the unions to play ball. Just give us time to overhaul the economy, he said. Trouble is, midterm electioneering intruded this year, and Kim found himself painting a sunnier picture of the economy than he should have. Worse, his party still got trounced in the mid-April elections. Now, with Kim weakened, the unions--backed by powerful allies in the legislature--are looking to reclaim their power and perks.REBELLIOUS MOOD. The KCTU is demanding a wage hike of 15.2% to make up for a 2.5% cut in 1998. It also wants unions to approve all layoffs. This being Korea, there is a tang of nationalism in the air. Labor leaders oppose privatization of railway and power monopolies, as well as the merger or closure of insolvent financial firms. They see the upcoming auction of Daewoo Motor Co. as a bargain sale to foreigners.
Finance & Economy Minister Lee Hun Jai insists Daewoo will be sold by August and continues to urge other Korean carmakers to join the auto industry's frenetic global consolidation. So expect labor turbulence ahead. Already, police have stormed a Daewoo plant and detained 20 people who staged a month-long sit-in. Four were charged with organizing illegal stoppages. Daewoo workers responded with a protest strike, while unions at Hyundai, Kia Motor, and Ssangyong Motor vowed solidarity.
The rebellious mood isn't limited to radicals. The million-member Federation of Korean Trade Unions (FKTU), which normally cooperates with Seoul, threatens an indefinite strike on June 1 if the financial sector is downsized further. The FKTU, which represents manufacturing and banking workers, also opposes plans to break state-run Korea Electric Power Corp. into six units and sell them off, because jobs will be lost.
Labor leaders cling to the illusion that hardball tactics still work as they did in the 1980s, when worker campaigns were equated with the fight for democracy. Much depends on whether unions can muster public support--notably lukewarm of late. Kim Ho Jin, chief of the Tripartite Commission, a group dedicated to seeking consensus among labor, management, and government, hopes "a sense of crisis will seep back in" and halt the looming confrontation. With the economy roaring, however, doom and gloom are far from most workers' minds. They want a payback, and they want it now.By Moon Ihlwan in Seoul International BusinessReturn to top