Unrest Could Hurt Economy : S. Korean Workers Reach for Bigger Slice of the Pie

The wife of a Hyundai Heavy Industries worker stood anxiously this week at the gate of a company dormitory, one child slung piggyback and another tugging at her plain cotton skirt.

She watched for her husband amid chanting ranks of Hyundai workers marching into Ulsan, a city of 600,000 and a Hyundai company town. The men were marching for more money and independent labor unions. Before the day was out, with the help of government intervention they had their unions and a promise of negotiations on wage settlements.

For the Hyundai group, a leading South Korean industrial conglomerate with seven subsidiaries and 75,000 workers in Ulsan alone, the wave of labor conflict has passed. The woman, her husband and their two children can now look for a bigger slice of the country’s growing economic pie.

But the wave rolled on. More than 400 labor disputes continued Friday, according to the Labor Ministry. Seoul was experiencing a contagion of sit-ins at five-star tourist hotels, the most recent at the Seoul Plaza, where at midday chefs and waiters began sitting on the floor of the lobby. And today, nearly one-fifth of the capital’s 18,000 bus drivers went on strike, defying a government-brokered settlement and stranding tens of thousands of morning rush-hour riders.

Disputes are settled and new ones break out. The country’s long-quiescent but now restive workers will influence political and economic developments in the months ahead. The question is: How much and in what form?

The government intervention in the Hyundai dispute could set a pattern leading to independent unions at other industrial firms. But Hyundai was a special case--a big exporter, producer of the Excel cars that have opened a South Korean wedge in the U.S. auto market. And its angry workers numbered in the tens of thousands. Would the government, faced with another violent conflict at a smaller company, come down on the side of labor?

Sympathy and a Warning

“Workers’ protests are understandable,” Chief State Prosecutor Lee Jong Nam said Thursday. But, he warned, “The prosecution will have to deal sternly with those who resort to extreme violence.”

President Chun Doo Hwan, addressing domestic reporters Friday, spun a bit of Asian allegory as he sought the bright side of the summer’s political and labor turmoil. “I have heard some people say that the various demands resulting from the democratic fever that has broken out these days may be likened to torrential monsoon downpours,” the president declared. “In fact, invariably in summer we have heavy rains, which are, however, indispensable to a good harvest in the autumn.”

Autumn should be a good time to measure the impact of the labor troubles of June, July and August. There will be several points to look for, including:

-- Whether leftists in the student movement can politicize conservative labor and persuade workers to join anti-government protests.

-- Whether South Korea’s export-based economy has been seriously damaged by wage increases and work stoppages. By most accounts, it has not yet.

Student Influence Slight

Despite charges by some government, management and ruling party officials that the outbreak of sometimes violent strikes and sit-ins has been led by one-time students who have infiltrated the work force, no convincing evidence has been put forth.

At a sit-in by Daewoo Motor Co. workers in Inchon two weeks ago, a company official insisted that the leaders included a former university student who had falsified his background when he was hired and who had been fired two years ago.

At a rally of Hyundai workers Tuesday night in Ulsan, the key speaker, according to a Korean newsman, used a university vocabulary and led the puzzled workers in songs known only to the student movement.

The examples provide a grain of truth to the allegation of undercover agitation, but the breadth of the labor unrest, from the industrial giants to small shops, suggests instead that June’s massive anti-government demonstrations for democratic reform simply gave workers the spirit to strike.

Pent-up Frustration

“Labor disputes stem from a pent-up sense of poverty and frustration,” conceded Labor Minister Lee Hun Kee. “Under the government’s growth-first policy, there is no denying that not enough attention has been paid to the question of equitable distribution of income and improvement of working conditions.”

Militant students would like to form an alliance with laborers and farmers to push their political aims this fall, during the pre-campaign period for the proposed direct presidential elections in December.

At the central city of Taejon on Wednesday, 4,000 students gathered to endorse a countrywide alliance of university activists. One of the leaders, a Seoul National University student, told a reporter: “Our ideology is very popular. Labor knows our aim. It satisfies their demands.

“This government will destroy the labor movement, so the labor struggle will evolve into a political struggle.”

In the long run, according to this student, the movement would like to combine collegians, workers and farmers in a “mass participatory progressive party.”

That sort of talk, and that sort of politics, however, will not find a natural acceptance by the country’s blue-collar workers, who constitute a plurality of registered voters.

Worker Evicts Student

At Ulsan, an American press photographer described a graphic example of the differences:

“This kid came by the main gate of the (locked-out) Hyundai Heavy (Industries) plant, handing out ‘Down with the dictatorship’ leaflets. One of the workers grabbed him and marched him off the grounds. It was rough. You could see the striations in his arms; years of lifting that heavy steel. It was Pittsburgh meeting Berkeley.”

In previous South Korean elections, according to one longtime politician, who asked that his remarks be anonymous, “Workers reflected a strong affiliation with management,” meaning they and the boss voted for the governing party and stability, despite the cost in political freedom. Even in the bitter Hyundai conflict, the workers’ chant for unity was: “Participate in the Hyundai family.”

A minority votes independently, the politician said. He suggested that the pattern this December will depend on who is the opposition candidate.

Labor’s Main Demands

Labor has two main demands:

-- It wants an improved financial package, higher wages and bonuses. For now, it is rarely addressing the issues of non-monetary benefits and plant safety, the latter dangerously deficient here.

Blue-collar workers produce South Korea’s dynamic export growth but are victims of one its foundations--low wages and long hours. Korean workers put in a 54-hour week for an average wage of $370 a month, according to government figures.

The same figures show the top 20% of wage-earning urban households earned an average of $1,190 a month last year. The bottom 20% took in an average of $238.

Living conditions for workers at the big factories--bachelor and married dormitories--tend to be bleak.

-- Labor also wants independent unions, an outgrowth of the call for political reform that swept the country in June.

Genuine Unions Scarce

Many South Korean companies, large and small, are non-union, and the rest have had pro-management bargaining agents, formed by a small number of workers. Through six years of the Chun presidency and that of the late Park Chung Hee before him, government pressure on management and labor have kept wages low on the premise that low labor costs would make South Korean exports price competitive.

Similar pressure and regulations, exerted through this June, have banned strikes and independent, democratic labor unions based on broad support from the blue-collar rank and file.

However, facing a strike and lockout that threatened to cripple a leading conglomerate and the No. 1 auto exporter, the government, through the Labor Ministry, reversed itself Tuesday, intervening in the Hyundai dispute to recommend recognition of the independent unions at Hyundai subsidiaries. The ministry further said it would seek to influence the companies’ existing pro-management unions to dissolve themselves, eliminating any legal confusion.

The government and company refused to recognize a workers “consultative committee” that could have become a single bargaining agent for all Hyundai subsidiaries.

Hyundai Agreed to Talks

Hyundai officials quickly agreed to enter wage negotiations with the new unions, promising to reach a settlement by Sept. 1, the government target date. “They know they cannot get what they asked (a 25% wage increase),” said Yoo Chil Jin, senior vice president of Hyundai Heavy Industries, “but they know they can get something.”

The workers’ sit-in and demonstration also set an example of influence that can by applied to management by combined action within conglomerate groups, which are the cornerstones of South Korean industry.

Meanwhile, representatives of the ruling and opposition parties, meeting to draft revisions to the constitution, have tentatively agreed to institutionalize basic labor rights, including collective action.

According to economists, the present costs and future impact of the labor upheaval are hard to gauge. Most say they are manageable so far.

Costs in Lost Production

On Thursday, the government’s Economic Planning Board reported that the wildfire of labor disputes has so far cost the country $533 million in lost production and $258 million in exports. In July and August, 1,252 disputes have been reported, more than in all of 1986, with 437 still unresolved as of Tuesday.

Tens of thousands of workers were off the job because of strikes or shutdowns. A lack of spare parts from troubled suppliers has kept auto assembly lines down for more than a week. With few exceptions, no major industry or service has been spared.

Still, the Central Bank reported, the country’s current account surplus was a record $1.12 billion in July, and economic growth in the first six months of the year, before the strikes began, was running at an astounding annual rate of 15%.

“If this continues . . . , “ economists invariably say as a preface to predicting major damage because of labor turmoil. A Trade Ministry official, for instance, told a Reuters news agency reporter: “The loss is still relatively modest. But if labor disputes continue unabated for a long period of time, the export-led economy might be damaged seriously.”

The ministry’s figures on exports showed 35.6% growth in the first six months of the year, compared to the 1986 figure, and 27.2% in the first 18 days of August, still a remarkable rate at the height of the crisis.