U.S. Firms Still Eager to Deal in S. Korea Despite Labor Strife
For years, American businessmen had the implicit assurance of a docile labor force in South Korea, but that has been wiped out by the labor strife that has swept the country since July. In 2 1/2 months, there have been more than 3,400 strikes, more than South Korea had had in the previous decade.
A promise that authoritarian government will be abandoned in favor of democracy has opened a new era of uncertainty for labor-management relations. Future governments will not be able to outlaw unions, ban strikes and limit wage increases.
Nevertheless, U.S. executives who came to South Korea eager to tap what they had regarded as a well-educated, hard-working and dependable labor force are not flinching.
“Our view hasn’t changed at all,” said an executive of a joint venture firm involved in manufacturing.
Six others, among them bankers and lawyers, indicated that they agreed with this position. All seven, who asked not to be identified by name, were interviewed at a meeting arranged by the American Chamber of Commerce here.
Guarantees for Labor
For the moment, they said, the worst of the labor strife appears to be over, but one quickly added, “We hope.” In any case, they agreed that there is no turning back. “The genie is out of the bottle,” one said.
Already the government and the opposition have agreed to support proposals that would guarantee, for the first time in this country, labor’s right to strike, to engage in collective bargaining and to organize freely, even industrywide unions.
There had been some fear that the military would intervene and drive the workers back into quiet submission, and this fear still exists among diplomats and many Koreans, but the Americans said this is no longer likely.
“Military intervention would send repercussions through society that would dwarf what happened in June,” one of the Americans said. It was in June that tens of thousands of demonstrators took to the streets across the country, forcing concessions from the government.
The American businessmen said the explosion of strikes that swept the country in July, August and September was caused only in part by demands for higher wages. Charges that workers were being exploited were “a gross exaggeration,” one of the Americans said.
Since 1980, South Korea’s gross national product has risen by an average of 7.7% a year, while real wages have increased by 7.3%, said one of the Americans, a banker. In comparison, he said, the American GNP increased by an annual average of 3%, and wages by 0.3%.
Freedom of Expression
The only labor strife here involving companies with American investment has been a strike at a General Motors joint venture with the Daewoo Corp., yet the American businessmen said that nearly all U.S. firms have suffered.
One said that a “few militant leaders eager to exercise power” have been able to stir up trouble. Other workers participated, he said, “because of the sudden surge in freedom of expression” touched off by President Chun Doo Hwan’s July 1 promise of democratic reforms.
Still, another of the Americans, also a banker, said the trouble runs deeper than disputes over power-sharing and wages.
“We learned that we have a communications problem, too,” he said.
He said workers’ representatives had failed to present their complaints to management, and in a society like South Korea’s, “where it is considered undesirable to deliver bad news, middle-level management pushed problems under the rug.”
“We learned,” he added, “that we must establish better communication with average workers.”
Even the success of the Korean economy contributed to the troubles, the Americans said. With real growth rising at “a virtually unsustainable rate” of 15% for the first half of the year, one said, managers were pushing workers too hard, extending the normal 54-hour workweek to 60 hours and more to fill the orders that were piling up.
Access Comes to Halt
“Labor was overworked” when the political turnabout came, he added.
In addition, the Chun government, which prides itself on having eliminated inflation, had clamped a lid on wage increases earlier this year to curtail upward pressure on prices created by the boom in the economy. Although the economy enjoyed spectacular real growth of 12.5% last year, wages rose by only 7%. After the strife began, the average wage increase was about 18%.
American executives here, the group agreed, are more frustrated by government impediments to doing business than by labor difficulties.
Korean markets remain closed to outsiders, or are highly controlled, and progress toward providing more access for foreign business has come to a halt because of the new political problems, they said.
The group dismissed as propaganda an announcement in April that the South Korean government will arrange the purchase of an additional $2.6 billion in American products this year to hold down the trade surplus with the United States, which reached more than $7 billion last year. The highly publicized announcement, the Americans said, was designed to buy time against opening Korean markets.
“They think Congress is going to get tired of the issue, that if they can just delay opening their markets a little longer, the problem will go away,” one of the Americans said.
Barriers removed in one form are inevitably erected “in different clothing,” another said.
And as soon as imports of a product start succeeding, Koreans demand that it be “localized”--by manufacturing it entirely or in part in Korea, the Americans said. They said American firms have also found that the South Korean government will cut off or restrict imports of any item that Korean firms start making.
Government officials chide American businessmen for not making enough effort to sell to Korea but then deny them permission to set up warehouse operations here, one of the Americans said. Some foreign firms, he said, are not allowed to advertise.
The Americans said they have found that they face a common problem in a deeply held nationalistic belief that Koreans should have a hand in, or control of, all manufacturing and sales here. The Koreans, they said, equate foreign profits with “taking savings out of Korea.”
Tremendous Opportunity
Problems with market access are likely to worsen in the future, they said. According to one of them, with the advent of democracy, nationalistic public opinion “has suddenly become very important, and it is molded by a hysterical press.”
The Americans agreed that democratically elected leaders will have to pay more attention to this problem than has Chun’s authoritarian government.
Still, labor troubles and difficulties with the government notwithstanding, the Americans said they are still convinced that South Korea is a place where they can do business, though not as much as they would like to do.
“There is an awful lot of positive here,” one said. “Korea offers a tremendous opportunity to make profits.”
Another said: “That’s why foreign investment rose 500% in August, even in the midst of the labor trouble.”
A third said: “The frustration is that business has to be done on the government’s terms. If they don’t want you to do business, it won’t be done.”
