Labour law draws roar of rage from Asian Tiger kindles strif in workplace fear of overdue reform born of 4/45pt set over four inyes

As South Korea enters its fourth week of labour uproar, with self-immolations, arrests of unionists, and strikes and riots, it is worth asking a straightforward question: given the apparent vigour of the country's economy and its remarkable growth since the Korean War, what is all the fuss about?

Official predictions for growth next year are 6 per cent, almost one point lower than the year before, but still enviable by European or American standards. In the decade up to 1995, wages in Korea increased fivefold. Unemployment also rose recently, but to a mere 2.4 per cent, a fraction of that of Germany. Do South Korea's trade unionists have a genuine grievance, or are they simply clinging to old-fashioned privileges long been abandoned by their Western comrades?

The law whose revision has raised such tumult in Seoul was an anachronistic institution, curiously out of keeping with South Korea's present status as a global manufacturing power. It was originally drafted in 1953, and, despite subsequent revisions, reflected the needs of a much poorer nation struggling to pull itself together in the aftermath of the Korean War.

Its most startling clauses, from a contemporary Western point of view, were the limitations it placed on an employer's right to lay off workers. Like Japan, Korea has a tradition of lifetime employment. For a firm to sack its employees has been seen as not only as an act of economic hardship, but as a betrayal of the nurturing, paternalistic role which the company is expected to play in the life of its workforce.

Companies were not able to reduce workforces because of slack demand or financial hardship. Apart from specific cases, such as gross incompetence or criminality, it was almost impossible for them to impose redundancies.

In case of strikes, firms were forbidden from bringing in outside labour, and there were limitations on the amount of flexibility in working hours which they could legally expect from their employees.

In the 1950s this served to deflect the burden of social security from an impoverished government on to industry. But the cosy arrangement has increasingly become a burden that Korean companies cannot afford, now that they are competing not only with Western competitors but with the fast- growing, low-wage economies of China and South-East Asia.

Under the new law, the old safety nets have been cut away. Like their Western counterparts, Korean workers can now be made redundant on grounds of bad business, changes in company structure, technological innovation, and because of the need to increase productivity. Non-union strike breakers can be brought in. Working hours can be extended to 56 hours a week as long as they average no more 44 hours, and employers can demand greater flexibility in shift arrangements.

The unions will make certain gains from the new law. Gone is the former bar on union political activity and contributions (although a union will be banned "if its primary objective lies in political or social activities"). In the past, unions were limited to one per company. But eventually employees will be able to organise across industries and professions, and come out in support of their comrades in other unions.

The problem is that while the bosses will win their new privileges as soon as the new law comes into force on 1 March this year, the unions will have to wait. To avoid "unnecessary confusion", in the government's phrase, free, multiple trade unions will not be allowed to function for another three years. Until 2000 only the old, official unions will be recognised. The Korean Confederation of Trade Unions (KCTU), which represents 500,000 workers, will remain technically illegal, and its leaders will be vulnerable to prosecution for "interfering with business activities".

The manner in which the new law was passed, at a secret session of the National Assembly, attended only by members of the ruling party, has convinced union leaders that the law is part of a concerted attempt to marginalise them. Many acknowledge that change was inevitable but that without the right to organise freely and legally, they feel uncomfortably exposed to the harsh weather of the international free market.

In with the new,

out with the old

Comparison of old and new South Korean labour laws

O: Old Law N: New Law

Political activities

O: Prohibited.

N: Permitted as long as it is not the union's primary objective.


O: Strict limits on employer's right to fire workers.

N: Employers can lay off workers in case of business downturn, technological changes, and restructuring.

Working hours

O: Little flexibility.

N: Flexible work schedules allowed. Working hours can be extended up to 56 hours a week as long as average hours do not exceed 44.

Third-party intervention

O: Separate unions may not strike in one another's support. Employers may not bring in substitute workers during strikes.

N: Third-party support in strikes and substitute workers permitted.

Union recognition

O: Official unions only, limited to individual work places. No multiple trade unions.

N: Workers can freely form and join trade unions - but only from 2000.