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South Korea's labor unrest may hold clues for Asia


By Sohn Jie-Ae
CNN Seoul Bureau Chief

May 29, 1998
Web posted at: 12:38 p.m. EDT (1638 GMT)

In this story:

SEOUL, South Korea (CNN) -- South Korea's labor confederation peacefully completed a two-day strike and mass rallies around the nation Thursday. But it's probably wise not to expect the country's labor troubles to die down any time soon.

The Korean Confederation of Trade Unions says a bigger protest is on the way unless the government gives in to its demands for the cancellation of massive layoffs, the boosting of unemployment benefits and the break-up of the country's business conglomerates.


For its part, the government has said it will deal harshly with organizers of the strike. Officials are considering taking legal action against the union.

But in the midst of the tug-of-war, the question remains: What really is at stake in this critically timed standoff?

Labor fights for traditional self-identity

From labor's perspective, the answer is clear.

In South Korea, where the traditional Confucianist influence remains strong, a job is widely regarded as tantamount to a person's value as a human being.

That is one reason lifetime employment has been the norm for as long as South Koreans can remember. It is also why the suicide rate among laid-off men is increasing rapidly.

Ever since South Korea's economy started its downward spiral last year, thousands of small companies have gone bankrupt.

Unemployment figures in April reached 6.7 percent, low by some countries' standards but the highest here in more than a decade.

The International Monetary Fund has called for layoffs as part of a belt-tightening program to help the struggling economy recover.

Backed into a corner, workers are lashing out.


"They're asking us to stop breathing," said Yoon Yong-mo, a spokesman at the labor group. "We won't do that."

World economy pressures government to be tough

From the government's point of view, the stakes are also high.

Ever since Kim Dae-jung was elected president last December, just before Seoul turned to the IMF Fund for a nearly $60 billion loan, he has loudly advocated following IMF reform measures to the letter.

In addition to layoffs, the measures included drastic downsizing of the country's overgrown and inefficient conglomerates, as well as the government bureaucracy itself. It also said the government can no longer support companies that should be bankrupt.

IMF officials have openly praised Kim's initiative and determination to get the country back on its feet.

But now, nearly six months after Kim's election, South Korea is still not undergoing major restructuring of the industry or the government. Some observers are becoming critical.

"The past five months have almost been a waste of time," said Thae S. Khwarg, president of Asset Korea Capital Management.

Trying to avoid Indonesia's example

And it is at this point that labor has struck a blow.

Both critics and supporters of the current government are watching carefully to see how the president and the economy handle the labor issue.


Without flexible labor policies, industrial restructuring is virtually impossible to achieve.

But isolating or oppressing labor would run the risk of social unrest, as witnessed recently in Indonesia -- something the government wants to avoid at whatever cost.

So how will the government try to convince labor of the inevitable, while also allowing labor to save face? How does it convince workers they should be the first ones to sacrifice for the good of the whole economy?

One answer seems to be to pressure South Korea's big conglomerates to come up with ways to become competitive without resorting to massive layoffs, something few companies are expected to be able or willing to do.

Hyundai Motor Co., the country's largest carmaker, has already announced plans to cut its work force by nearly a third.

Resolving the labor issue is itself not the whole solution to South Korea's economic problems. But most observers agree it is an issue the country cannot afford to ignore if it wants to regain economic prosperity.

There are no easy answers. But as more Asian countries find themselves facing similar tough choices, South Korea's success or failure could provide some valuable lessons.

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