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International Confederation of Free Trade Unions (ICFTU)

Mass dismissals in Korea: the trade unions go on the offensive

According to the Labour Ministry, more than one million Korean workers may lose their jobs between now and March and experts estimate that unemployment, currently at 2.8 per cent, will rise to 6 per cent in 1998.

In a joint statement issued this week in Seoul, outgoing President Kim Young-sam and his successor, Kim Dae-jung, who will officially take over the presidency in February, say that "without dismissals, foreign investors will turn their back on South Korea and the country will be plunged into deeper crisis".

"We cannot accept the argument that dismissals are the only means of saving our economy" says Yoon Young-mo, spokesperson for the Korean Confederation of Trade Unions, KCTU. Officially "illegal", the KCTU, which represents 500,000 workers, has threatened to take a harder line next week when the government is due to hold a special session of parliament to adopt the bill as law. Several major unions affiliated to the KCTU have already begun consultations and are expected to announce strike action as from 16 January.

The Federation of Korean Trade Unions (FKTU), which has legal status and has more than one million members, has also let it be known that it is opposed to the dismissals but has not yet specified its intentions. At the beginning of 1997, the two trade union organisations, both affiliated to the ICFTU, protested jointly against new labour legislation adopted on the sly by the government in December 1996, provoking an unprecedented strike movement in the country. Under pressure from the trade unions, and an international solidarity campaign run by the ICFTU, the government finally postponed the application of the provisions in the new law authorising mass dismissals until 1999. These are the provisions which could come into force as from next week, causing an estimated million or more job losses by March. A total of three million jobs may be wiped out over the next three years.

The weakness of Korea's social protection system was one of the trade unions' main arguments when opposing the legislation last year. Created two years ago, unemployment insurance provides barely three monthly payments to dismissed workers, equivalent to half their last salary. In most cases, this compensation amounts to only a few hundred dollars in total. As for pension funds, set up ten years ago, they will henceforward only pay half the amount foreseen. It was recently disclosed that the 25 billion dollars held in pension funds had been invested in the stock market, and had consequently suffered from the upheavals in the financial markets.

In exchange for the dismissals, President-elect Kim Dae-jung has promised to inject more than two billion dollars into unemployment insurance. But the KCTU believes the government should turn its attention to the chaebols, the giant family run conglomerates that control up to 80 per cent of the Korean economy, if it wants to overcome the crisis.

The management of the chaebols is widely considered to be at the root of the crisis. In their drive to expand, they had contracted debts far exceeding the value of their assets, thanks to the benevolence of the banks and the indulgence of successive governments. At the end of December, 8 of the 30 principal conglomerates were heading for bankruptcy, including the country's third largest car company, Kia Motors, with liabilities of more than 6 billion dollars. In the last two months the national currency, the Won, has lost nearly 60 per cent of its value, hitting hard at Korean workers' purchasing power.

The International Monetary Fund's (IMF) rescue package, of a record amount of 57 billion dollars, is also partly responsible for the government's plans for cutting down the workforce, as it has called in return for greater freedom for enterprises to dismiss staff.

Shortly after his election on December 18 last year, Kim Dae-jung met the trade unions (FKTU and KCTU) and announced the formation of a tripartite committee (government-employers-trade unions) with a view to promoting a "social contract" for the fair sharing of the sacrifices to be made for economic recovery. This emerging social dialogue may be seriously compromised however if the government gets the green light from parliament next week to proceed with mass dismissals. Both the FKTU and the KCTU have announced that they will withdraw from the tripartite committee if it limits its task to making the workers pay the cost of the crisis.

Contact: ICFTU-Press at: ++32-2 224.02.12 (Brussels).