By Eva Cheng
Unemployment has tripled, wages are increasingly not paid and workers are facing new attacks on their rights in South Korea since the International Monetary Fund's austerity program was forced on the country in December.
From 556,000 in December, South Korea's officially unemployed surged almost three times to 1.64 million — 8% of the work force — in mid-March. Labour minister Lee Ki-ho has warned that more workers will lose their jobs and there will be high unemployment for the next three years.
Lee declared that simultaneous dismissals of more than 30% of a company's work force could be considered illegal. Hyundai Motors was reportedly planning to fire 20-53% of its 15,000 workers.
The banking sector has already fired 12,500 people, 10% of its work force.
In a further attack on the unemployed, the Kim Dae-jung government has rolled back an agreement, sealed by bosses' and workers' organisations in February, which grants the unemployed the right to organise.
That agreement was part of a bigger deal under which the Federation of Korean Trade Unions (FKTU) and the Korean Confederation of Trade Unions (KCTU) accepted the removal of legal impediments to massive lay-offs in exchange for some union rights. Seoul announced a ban shortly after the FKTU and the KCTU announced plans to unionise the unemployed.
The pro-establishment FKTU immediately assured the bosses it would focus on job training, medical check-ups and job market intelligence, and was not contemplating militant actions such as demonstrations.
The orientation of the KCTU unions for the unemployed is not yet clear. The confederation was scheduled to vote for a new leadership on March 31, following heated internal debates over the controversial decision by an emergency leadership, led by Dan Byong-ho, to call off a general strike planned for February 13, only days after the government's announcement.
The general strike was called in response to a bill to legalise the massive lay-offs, after a majority of the KCTU voted out the previous leadership of Kwon Yong-kil following its participation in the February tripartite accord. Under Kwon, the KCTU had led millions of workers in a general strike from December 1996 to January 1997.
The government recently suspended the indictment against eight union activists, including Kwon, over the 1996-97 general strike, as reward for their cooperation in the February accord. In late March, the FKTU proposed a merger with the KCTU by 2002, an idea which the current KCTU leadership said it would "positively" consider.
Meanwhile, many bosses have refused to observe even the limited legal protection for workers. Complaints to the Labour Ministry, mainly over unfair dismissals or deferred wages, surged by 30% in January and 48% in February compared to the same periods last year. Last month, the ministry ordered 224 companies to comply with the law.
In the name of raising funds for the unemployed, the government on March 23 announced plans to cut public sector workers' pay by 20%.
A member of the Korea Development Institute, a government think-tank, observed that while the middle class and the poor were hit by soaring prices, mounting unemployment and steep wage cuts, the "cash-rich" were getting richer thanks to high interest rates and favourable government policy.
Thirty-nine foreign banks increased their net profits by almost 200% (930 billion won or US$596 million) and registered unrealised profits of 985 billion won, mainly through currency futures and other speculative trading.
The fate of South Korean firms, mostly highly geared (the top 28 groups carry debts 4.5 times their capital), has been less rosy. Of the 80 listed affiliates of the top 10 conglomerates, only four made a profit last year, the rest blaming huge foreign exchange losses and crushing interest burdens for their losses.
An official of the Federation of Korean Industries warned that, to protect their profits, companies will have to cut their payrolls for every increase in interest rates.
On March 18, the American Chamber of Commerce in South Korea went even further, calling on the government to repeal the labour laws allowing multiple trade unions; allow unions to be set up only when 51% of the "qualified" work force participates; severely restrict the right to strike; abolish annual holidays; and ban menstruation leave.
Some 76% of the unemployed are unable to access the limited unemployment benefits. After a sharp rise in the number of homeless people in Seoul's underpasses and other public places, in late March authorities announced a plan to convert a four-storey state building into a temporary shelter for the homeless.
A big increase in abandoned children has also been reported, with parents citing unbearable economic difficulties.