The Attack of Neo-liberalism
and Labors' Situations
after IMF's Control in Korea,
by
Park Chan Sik
Director of Institute of Democratic Trade Union Movement
I. Historical outline of labor movement in Korea
Korean War did fatal damage to Labor movement in Korea. Thereafter, dictatorship in the South, based on the division of the nation, had violently suppressed growth of independent labor movement under the veil of anti-communism and anti-North.
Incredible economic growth since 1960, so called 'Miracle of Han river', was possible at the expense of workers. No political right, extremely low wage, world-record working time, and the highest rate of industrial accident show that super-exploitation of workers enabled Korean capitalism to develop so.
Self-burning of a worker named Jun Tae-Il, in 1970, gave birth to new militant trade union movement, called "Democratic Trade Union Movement"
This movement was harshly suppressed by Park Jeong-Hee's and Cheon Doo-Whan's military regimes, but pushed unionistic labor movement, so far having been bound to wage issues, to pursue solidarity of working class and take a revolutionary point of view.
As peoples' struggle for democracy weakened the military dictatorship on June, 1987, Korean workers provoked nationwide general strike for several months, under the banner of "We want to live in the way of human-being, not machine!"
This struggle brought popular foundation to Democratic Trade Union Movement.
That made it possible to launch KTUC(Korea Trade Union Congress) as a center of independent, democratic and militant labor movement on Jan. 1990. KTUC made a good job of expanding and developing Democratic Trade Union Movement.
As President Kim Young-sam took office as the first civil government after 30-year-long military regime, in 1993, the leadership of national democratic movement and labor movement became reformistic and compromising.
In the rank-and-file level, however, militant union activism persisted and improved, for instance, Hyundai worker's general strike in 1993, a struggle built up in main industries including railroad and subway in 1994, Korean Telecom workers' in struggle in 1995.
Moreover, in this process, Democratic Trade Union Movement expanded to "white collar" workers such as office workers and public sector workers and resulted in the launch of KCTU (Korean Confederation of Trade Unions) in 1995.
At first, the leadership of KCTU showed somewhat compromising and disturbed attitudes, but it led the nationwide general strike opposing the labor bills railroaded through legislature in the end of 1996. Through this struggle KCTU confirmed its status as the representative of 10 million workers in Korea and played the role to form a solidarity against neo-liberalism in the world revel.
II. Economic panic and Trusteeship under IMF destroyed the lives of workers and ordinary people
Exchange crisis caused by transnational financial capital's withdrawal broke down Korean economy that had depended on excessive short-term loan.
The worst situation has come since the Korean war 1950.
Like other countries in East Asia, Korean economic crises was caused by transnational financial capital's strategy to demolish East Asian model in which government lead economic development, taking advantage of internal weakness for example, chaebol system, collusion between the political and economic establishment, unreasonable expansion, and excessive loan from abroad.
Reckless door-opening, related to agreement of UR and affiliation of OECD disarmed Korea of counteracting to the offensive of transnational capital.
IMF, representing the interest of the U.S and transnational capital, attained trusteeship by providing financial rescue. IMF forced Korea to do away with any sort of regulation to obstruct the flow of foreign capital. Super austerity and super-high interest rate for the structural adjustment resulted in the series of bankruptcy of Korean corporations.
After IMF regime, as economy goes catastrophic, the lives of workers and ordinary people put into the terrible condition.
Most of all, mass unemployment has been the problem. Irregular workers such as daily and temporary lost their jobs and regular workers as well were laid off massively, so newcomers into labor market can't nearly have opportunity to get jobs.
According to government's official statistics, the unemployed amounts to 1,650,000. In this figure many other unemployed are missed such as the discouraged jobless who gave up getting a job, workers who worked over one hour a month, and household workers without payment So, the actual number of the unemployed almost come to 4,000,000. This is 1/5~1/6 of the whole population of economic participants. Surviving workers should bear 30 or 40 age cut, in terms of nominal wage. If we consider the rising rate in prices, real wage has reduced by half. Now, they are still in the risk of lay-off and are forced to work overtime.
Korea does not have any kind of unemployment allowance system. Even though employment insurance system is about to be in force, allowances are too small and terms are too short to be a countermeasure for living. Over the half of labor such as daily, temporary, and part-time workers, contingent workforce and workers in small businesses are excluded from this benefit. Those workers, who lost their jobs after IMF's rescue, stand at the crossroads between life and death. Not only workers but peasants and the urban poor like street vendors, petty merchants and petty proletariat in the same condition. Economic breakdown affects social and family life as well.
III. Neo-liberalistic Structural Adjustment.
As the program of IMF have been the target of criticism over the world after East Asian crisis, IMF allowed to relax the retrenchment policy in Korea. Therefore now Korean economy recovers its growth from the depression of last year. But the neo-liberalistic structural adjustment is going on without suspension. Although, that is, economy return to prosperity, workers and ordinary people would be left out of it.
Structural adjustment based on 'Neo-Liberalism' consists of unlimited door-opening, radical reform of public sector, abolition of governmental regulation over accumulation of capital, flexibilization of labor market, privatization of banks and prohibition of government intervention, etc.
Adjustment of banks and corporations
The government has obliged unprofitable corporations and banks which don't meet BIS standard to stop working. Two large banks, Seoul Bank and Jeil Bank, which escaped closing is undergoing to sale to foreign financial corporations. Other leading banks and financial corporations have been under control of foreign capitals as heavy stockholders. In addition to liberalization of capital and exchange market, the financial sector has been seized by transnational capital. It will deprive the government of capability to carry out independent economic policy.
Besides financial sector, many fine corporations have be taken over by foreign investors. Recently as Dawoo, the forth conglomerate (chaebol) group in Korea, is bankrupted in fact, the chief corporations of the group including motor company and shipbuilding company are to be taken over by transnational corporations.
Privatization and Sale to Foreign Capitals of Public Enterprises
In early July 1998, the government announced privatization program, covering eleven state-owned enterprises. These state-owned enterprises include: Korea Telecom which is Korea's leading telecommunications company, POSCO which is the second largest steel manufacturer in the world, KEPCO which is Korea's vertically integrated electricity utility and so forth. Then KEPCO was included by privatization plans of the government for the first time.(KEPCO had not been included by privatization plan before IMF regime.
The July announcement was followed in August by the announcement of a comprehensive management reform program covering 19 state-owned enterprises, or 64 enterprises if we include their subsidiaries.
According to this plan, relatively small public enterprises has been taken over to private corporations and large enterprises have sold their shares to domestic or foreign investors. Foreign investors have been heavy stockholders in main enterprises such as Pohang Iron and Steel Co., Ltd.(POSCO), Korea Telecom, Korea Tobacco and Ginseng Corp etc. And about thirty hundred labors have been dismissed for one year.
Restructuring has been accompanied by reengineering of labor market.
One of the main demands of IMF is flexibilization of the labor market. So redundancy dismissals and workers' dispatch system abandoned by '96~97 general strike was legislated rightly after IMF agreement. As for employment form, the various non-regular labors such as part-timers, temporary workers, dispatched workers, daily workers etc. have increased rapidly. The proportion of regular workers is declining(it was reduced from 52.5% to 50.9%), employment becomes more and more unstable.
The wage system also has changed from the seniority rule to performance rule. All workers is to be in the severe competition.
If this structural adjustment succeeds along the plan, firstly, lucrative banks, public enterprise and common corporations will be taken over by foreign investors. And the unrestricted financial gambling would transfer economic wealth based on the sacrifice of Korean workers to transnational capital. Furthermore Korean economy, subject to the speculative flow of transnational capital, will become so vulnerable and unstable that it can collapse easily. After all, Korea will be economic colony of transnational capital and USA
The economical and social differences between the rich and the poor become serious as days go by. Homelesses who sleep in the railroad depots or public parks are increasing explosively. Divorce, suicide, crime for mere living, too. Now, drug addicts include not only gangs, hookers and entertainers but even ordinary house wives.
Thus neo-liberalistic structural adjustment by the trusteeship under IMF are worsening economic standard of living and wrecking social and human life completely.
III. Korean labor movement since IMF regime.
1. The shake of Democratic Trade Union Movement in the early days of IMF regime
When the panic and trusteeship under IMF came, Korean labor movement had no preparation whatsoever. Under the fear of national ruin and massive ideological attacks, representatives of conservative union, FKTU (Federation of Korean Trade Unions) and somewhat reformed KCTU participated tripartite( labor-corporation-government ) council on Feb. and agreed a 'redundancy dismissal' legislation. But this decision was rejected by delegates of KCTU and the first term leadership of KCTU resigned. ( Of course ,regardless of this rejection, conservative National Assembly legislated a series of bills such as redundancy dismissal system and worker's dispatch system for flexibilization of labor market.)
And the more militant group was elected as president and its staffs in KCTU.
2. People's resistance against IMF and its Neo-Liberalistic structural adjustment
Newly elected representatives of KCTU clearly opposed to the attack of IMF, government and capital, as their members wished.
KCTU launched two day general strike (on May 27, 28 1998) demanding reform of chaebol and renegotiating with IMF. 110,000 workers from 128 unions, mainly of the Korean Metal Workers Federation and the Korean Federation of Public and Social Service Workers' Union, took part in this strike. KCTU launched general strike again on July 14, 15 for a halt of compulsory structural adjustment and redundancy dismissal, eradication of the illegal and unfair labor practices.
Especially Korean Telecom workers participated in this strike. Along with the strike action, KCTU held public meetings and mass rallies in different cities. In each industries, workers fought against redundancy dismissal, wage cut and suppression on trade union. Recently workers of Hyundai Motors, the biggest manufacture, went on strike for about a month opposing redundancy dismissal.
It showed dramatically how the battle between working class and bosses goes, related to neo-liberalistic structural adjustment and redundancy dismissal. Hyundai Motors workers camped out around their factory and continued desperate struggles, even family members joining. After all, the intensive confrontation was resolved by official arbitration and resulted in union's accepting of dismissal and reducing number of dismissal from 1,569 to 277. And other struggles throughout the country go on against dismissal, suppression and wage cut.
In April this year, Korean workers launched the general campaign lead by public sector workers, especially the Seoul Subway Workers. The KCTU General Campaign was aimed at forcing a change in the overall orientation of the government’s restructuring policy based on neoliberalism and Washington Consensus. KCTU calls for an end to this mad policy.
There was a tendency among workers to accept IMF package without suspicion at first. It was supported by the press, mostly very conservative. As time goes by, however, workers are getting to realize the nature of IMF rescue and neo-liberalistic structural adjustment. And they are raising their understanding over the reason to protect their rights and oppose to transnational capital and chaebol. They got to know how to overcome this crisis fundamentally, i.e. international solidarity against transnational capital, democratic reforms including liquidation of chaebol.
However just understanding these is not enough to make a difference. In the globalizing world, the isolated resistance in one country can't counter the transnational capital' attack. So even activists who grasp reality have many difficulties in action. That is why, on the one hand, we have no option but to compromise with reality right now, on the other hand, why workers, labor activists and conscientious power should build up international solidarity.
Actually, similar to other country, Korean workers are not powerful enough to resist the invasion of capital pursuing globalization of itself. They, however, are not in favor of neo-liberalistic drive campaigned as the only alternative by the government and transnational capital. Korean workers and labor movement will continue to struggle for the right to live and for national sovereignty, opposing transnational capital and neo-liberalization. And they will develop international solidarity with all labors and people fighting for humanity against neoliberalism which puts priorities on the logic of capital accumulation before everything.