Union’s Stance Could Bolster S. Korea Reforms

The withdrawal of a militant South Korean labor confederation from an agreement to endorse sweeping changes in labor laws renews the threat that strikes could undermine efforts to deal with the country’s economic crisis.

But disarray in the Korean Confederation of Trade Unions--which now has new hard-line leadership that called Tuesday for strikes starting Friday--also presents opportunities for the incoming administration of President-elect Kim Dae Jung, who takes office Feb. 25.

Most observers believe that the 550,000-member KCTU will win little public support for its call for strikes to protest a planned new law that would make it easier for companies to lay off workers.

In the long run, a failed union effort to derail labor reform could strengthen Kim’s hand as he pushes for changes mandated by a $60-billion International Monetary Fund bailout package agreed to by Seoul in December. Greater flexibility in employment practices is one of those IMF conditions.

Stocks fell Tuesday in reaction to the renewed threat of labor strife, with the benchmark Kospi index closing at 541.77, down 2.2%.

But Kim Won Gil, a policy aide and spokesman for President-elect Kim, expressed confidence that the fresh union threats will not prove to be a serious problem. “Resistance by a handful of militant labor unions is what the government expected,” he said.

Public sentiment strongly favors efforts to meet the terms of the rescue package and get on with the heavy task of restructuring the economy. Kim Dae Jung is positioning himself as someone who demands--and wins--tough sacrifices from both business and labor.

The president-elect Tuesday signaled his determination to press forward with reform of the nation’s corporate structure by appointing economics professor Kim Tae Dong--a prominent critic of the huge conglomerates that dominate South Korea’s economy--as his top economic advisor.

Kim Tae Dong, 52, who holds a doctorate from Yale University, published a poem several years ago that said South Korea suffered from five “thieves”: business conglomerates, government officials, environmental criminals, lawyers and the press.

At a news conference Tuesday, Kim Tae Dong projected a moderate image, stressing that he is “a strict believer in the market economy.” But his background as a critic of big business may give him enhanced credibility in dealing with organized labor.

Just last Friday, under its previous leadership, the KCTU had joined in a three-way agreement among unions, business and government to endorse pending labor legislation that would undo South Korea’s tradition of lifetime employment and make it easier to fire workers.

But the labor-business-government agreement largely unraveled when two-thirds of delegates from member unions of the confederation voted Monday to renounce the deal, prompting the resignation of the confederation’s leadership.

Union officials have said proposed labor law revisions could boost unemployment to 1.5 million by the end of this year, up from 658,000 in December.

The KCTU’s acting president and entire board responded by resigning. They were replaced by an emergency committee headed by Dan Byong Ho, president of the Korean Metal Workers Union, who has a reputation as a hard-line unionist. The committee declared Friday’s agreement null and void.

The new union leaders also demanded renegotiation of the proposed labor law, and threatened a nationwide strike if steps are taken to push the current draft through parliament. In a statement, the confederation said the proposed unemployment insurance fund should be doubled to $6.25 billion and that tougher controls on layoffs should be maintained.

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Chi Jung Nam of The Times’ Seoul bureau contributed to this report.

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