Labour Group In South Korea Threatens Strike

A militant South Korean labour group yesterday threatened to stage a general strike that could throw the country back into economic crisis, if a landmark agreement making layoffs easier was not renegotiated.

But few South Koreans would likely heed the call for an all-out strike called by the Korean Confederation of Trade Unions (KCTU), analysts said.

South Korean workers who for the first time in recent memory face the prospect of unemployment have little appetite for a confrontation that could make things worse, they said.

The public as a whole would not join a strike, said Kim Dae-il, labour economist at Korea Development Institute, a state-run think-tank.

 

Everyone is worried about being laid off. They do not want to jeopardise their jobs, he said.

Rank-and-file leaders of the KCTU late on Monday rejected last week's tripartite agreement making layoffs easier. They decided on Tuesday to strike unless it was renegotiated.

Our representatives decided this morning to stage a general strike indefinitely from Friday unless our demand for renegotiations is accepted, said a senior KCTU official.

The official, who declined to be identified, said the550,000-member confederation could call a strike before Friday, if the National Assembly tried to pass the labour reform laws agreed by the tripartite commission this week as scheduled.

KCTU rank and file leaders also demanded the countrys business conglomerates agree to additional reforms.

Analysts said there was plenty of room for additional reforms by the big business groups, but that the government was limited in how much pressure it could exert.

"You can't simply strip the chaebol owners of their ownership in these companies," said Richard Samuelson, head of research at SBC Warburg Dillon Read in Seoul.

"At the end of the day there has to be a private-sector, market-driven decision to restructure," Samuelson said.

The layoff pact was a crucial element of South Korea's reforms under the International Monetary Fund's record $58.35 billion rescue package agreed in December.

The pact, reached on Friday by negotiators representing business, labour and government -- including the confederation-- would allow management to lay off workers with prior notice and to hire temporary workers.

Financial markets responded enthusiastically to the agreement on layoffs, which are legal but difficult to execute under the country's current labour regulations.

But markets turned jittery on Tuesday as news of the confederation's rejection and strike threat spread.

The composite stock index closed down 2.25 percent to 541.77 points, while the won weakened to 1,584.0 won against the dollar from Monday's close of 1,558.0.

Analysts said foreign investors would likely react even more negatively when they learned the news.

"The domestic investors' reaction will be mirrored by foreigners, perhaps even more so because foreigners don't have a way to second-guess labour's intention," said Hank Morris, a veteran securities analyst in Seoul.

Outgoing President Kim Young-sam and Kim Dae-jung declared on Tuesday the tripartite agreement must be implemented.

"The labour-business-government agreement to overcome the current economic hardship is a symbol of national unity that should remain forever in our history, and should be implemented successfully," a statement from the presidential office quoted the two Kims as saying.

"Therefore, the agreement should be implemented in support of all the people," it said.

Their remarks came hours after the confederation rejected it and made its strike threat. It was unclear whether the Kims' remarks were a response to the labour group's threats.