| KCTU Monthly News: September-October 2004|
KCTU Plans General Strike to Protest the Government’s Proposed Bill on Irregular Workers
The KCTU Congress Calls for General Strike
At the KCTU’s 32nd Congress, which was held on September 21 at the Olympic Parktel in Seoul, more than 450 delegates unanimously voted to implement a General Strike as part of the KCTU’s work plan for the second half of 2004. The delegate’s vote was in response to the government’s plans to introduce a series of bill aimed at supposedly addressing “discrimination” of irregular (part-time, contract, sub-contract, non-permanent, and temporary) workers. Originally the KCTU had planned a “4-Hour Warning Strike” but the KCTU delegates determined that the government’s proposal, which was announced by the Ministry of Labor at the Uri Party headquarters on Septembers 16, was much more problematic. The government’s proposal would not only worsen the conditions of irregular workers but the crux of the government’s plan was to irregularize regular workers. Because of this, the delegates voted for a General Strike.
In addition to calling for the withdrawal of the government’s current proposal on irregular workers, the KCTU will be also demanding: 1) a stop negotiations on the South Korea-Japan Free Trade Agreement and the South Korea-U.S. Bilateral Investment Treaty; 2) a stop to the extension of deploying South Korean troops to Iraq; 3) recognition of basic labor rights for government workers; 4) abolishing arbitrary intervention; and 5) abolishing seizure of workers’ and union property as a method to undermine worker and trade union rights. It was agreed that the General Strike will begin on the day that members of the Ruling and Opposition parties meet to discuss rather than tabling the bill on irregular workers at the Environment & Labor Standing Committee of the National Assembly.
KCTU Membership to Vote for General Strike
At the Congress it was decided that the all union members of the KCTU and its affiliated unions will vote on whether they support or not support the General Strike. Members will vote from October 25 to November 6. During this time, the KCTU leadership will be touring across the country and visiting worksite to worksite to gather a broad support for the General Strike. Also through the tour, the leadership hopes to galvanize the more than 700,000 members of the KCTU so that once the General Strike is called, it will clearly reflect the participation and the support of the entire membership. Since the focus of this particular General Strike is on the government’s proposal on irregular workers, the KCTU in reality does not need the approval of its membership, as this goal is a political one. However, the KCTU delegates believed that only through a strong and broad support from the membership can the General Strike be successful.
Mobilizing for the General Strike
From October 7 to 8, over 600 representatives and leaders of KCTU affiliated unions met in Kangwondo, for a national meeting to prepare and mobilize for the General Strike. At the meeting, participants were briefed on the contents of the government’s bill as well as the alternative proposals outlined by both the KCTU and the Democratic Labor Party. Additional presentations focused on other legislative policies such as the South Korea-Japan Free Trade Agreement, the three basic labor rights for government employees, as these issues will be also incorporated in to the General Strike. Finally, the logistics and the action plan for the General Strike was discussed. It was agreed that once the General Strike was launched, the KCTU would become the national headquarters for the General Strike. By the end of two-days, everyone recognized that the General Strike would be a critical one in determining the future of the South Korean labor movement.
National Irregular Workers Rally
More than 10,000 workers participated in the Rally for National Irregular Workers. At the rally, workers resolved to support the General Strike and work towards stopping the government’s proposed bill on irregular workers and other legislative measures that would worsen the situation for South Korean workers. Instead, rally participants agreed to adopt alternative legislative measures that would end discrimination against irregular workers, stop the South Korea-Japan Free Trade Agreement negotiations, stop revisions to the law on pension funds, and to ensure the three basic labor rights for government workers. In many ways the Rally was the first step for workers to mobilize for the General Strike.
Analysis and Critique of the Government’s Bill on Irregular Workers
What’s Wrong with the Government’s Proposal?
The current proposal outlined by the government on irregular workers is the worst possible scenario for irregular workers. The government’s plan would basically allow “free usage” of irregular workers, as companies will be able to employ temporary and dispatched workers without any restrictions or limitations. More importantly, the real objective of the bill is to turn all of the 14 million South Korean workers into irregular workers. This will undoubtedly lead to a deepening of job insecurity amongst South Korean workers, worsen worker rights in South Korea, and weaken the South Korean trade union movement.
Expansion of Irregular Workers
The primary problem with the government’s plan should it be implemented is the extension of industries that can dispatch irregular workers. After the 1997 IMF crisis, the then Kim Young Sam government passed a series of labor laws, one of which allowed companies to hire temporary and contract workers. As a result of this legislation, temporary agencies, which basically act as a “middle person” between the employer and the worker, was established. Consequently, exploitation of workers by these temporary agencies as well as job insecurity increased. With the introduction of these temporary agencies were established to basically act as a “middle person” between the employer and workers. Additionally, under the guise of “sub contracting” workers, illegal dispatch of workers is prevalent.
Currently 26 types of industries can use dispatch workers but the new government proposal will basically enable all sectors, with an exception of few industries, to use dispatch worekrs. The government’s proposal is even worse than the one proposed by the Tripartite Commission, which proposed to “maintain the 26 industries that use dispatch workers and to establish a separate committee consisting of employers and workers to rationally mediate the further hiring of dispatch workers.” Additionally, the year of contractual service will increase from two to three years. Clearly these two provisions will undoubtedly encourage the further use of dispatch workers. Thus, despite the government’s promise of introducing legislation that would end discrimination against irregular workers, under the proposed bill, the situation of irregular workers will worsen.
The government has proposed, as a measure of controlling abuse of the system of hiring dispatch workers, a temporary suspension of three months after having used dispatched workers for three years. However, this is a useless preventive measure. With a “freer” use of temporary contract workers, this “measure” will end up fuelling a vicious cycle in which employers will use dispatched workers for three years, temporary workers for three months, and then dispatched workers again for three years, and so forth
The major problem that irregular worker face is the infringement of three basic rights---the right to organize, the right to strike, and the right to a collective bargaining agreement---due to lack of clear accountability by the employer. In other words, employers who use dispatch workers deny any responsibility for these workers’ rights. Thus it is extremely problematic that measures to strengthen legal obligations of users or those that consider illegal dispatch to be direct employment are non-existent.
Institutionalization and Deregulation in the Use of Irregular Workers
The government’s proposal on the use of temporary work is expected to be more devastating than the measures on dispatched workers. The Ministry of Labor has proposed to allow free use of temporary workers up to three years, and plans to introduce measures to control lay-offs for those who have worked for more than three years. If this proposal is legislated, then most companies will resort to using temporary workers freely for up to three years. Therefore, temporary work will not only be ‘irregular’ work, but the most prevalent form of employment. In the end, the government’s proposal will not regulate misuse of temporary work, but on the contrary, institutionalize and generalize temporary work by allowing free use within the three year period. The effects of this proposal will be very extensive---the labor market will be restructured into one centered on irregular work.
The government’s proposal also lacks limitation to the boundary of temporary workers use. Such limitation is vital to controlling expansion and abuse of irregular workers. The indiscriminate use of irregular workers by employers directly expands irregular work and abuse; therefore, employers should only be allowed to use irregular workers only with objectively and rationally justifiable reasons. However, measures of this sort are missing from the government’s proposal.
The government argues that the limitation on lay-offs of those temporary workers who have worked more than three years to be a method of controlling misuse; however, employers will not employ workers for more than three years in the first place. Employers will cancel contracts for temporary workers before the three year deadline, or switch with another temporary worker. Freer use of the both worker dispatch system and temporary work will allow employers to ‘appropriately’ combine the two and generalize the usage of irregular workers.
Negation of Worker Rights Including those of “Self-Employed” Workers
The government passed on the responsibility of discussing the issue of “self-employed” workers to the Tripartite Commission. Hence, in the new proposal there are no measures that address the specific concerns and discrimination faced by this class of workers. On paper, “self-employed” workers are considered to be individual businesses but in reality these workers must sign contracts with a specific company. The terms and the conditions of these contracts are not negotiable but are pre-determined and set by the hiring company. It should be noted that the Ministry of Labor has recognized that these “self-employed” workers have basic labor rights such as the right to organize and form a union and the right to a collective bargaining agreement. Nevertheless, the government has chosen to ignore the specific demands of “self-employed” workers, and has removed itself from all responsibility.
There are suspicions that the government is contemplating on introducing measures to “partly recognize rights of pseudo-workers.” However, this will not be a recognition of workers’ rights according to the labor laws, as the partial recognition of “pseudo-rights” on collective action and bargaining will merely further negate the existing activities of these workers as well as their rights.
It is quite clear that the government’s proposal on the provisions impacting dispatch workers, temporary workers, and “self-employed” workers, the power of control lies with employers. Thus, employers who have adopted anti-trade union policies will greatly limit the formation and scope of trade union activities, using threats to cancel employment contracts or to refuse renewal. This will further deteriorate the condition of workers.
Refusal to Make a Written Statement on “Equal Pay for Equal Work”
The government has refused to make a written statement on the principle of “equal pay for equal work,” which is fundament in eradicating discrimination against irregular workers. The majority of irregular workers are discriminated in their wages even though they work in the same workplace as regular workers and they perform the same type of work. The government has merely mentioned a vague principle forbidding discrimination against irregular workers and is arguing that an introduction of a committee---a body whose effectiveness is unsure---will resolve all problems with discrimination against irregular workers. However, without a written policy statement on the principle of “equal pay for equal work”, there is no standard on which to judge discrimination. Additionally, a relief body under the Labor Commission rarely hears irregular workers’ grievances or does it resolved key issues facing irregular workers. The passive attitude of the Labor Commission on illegal dismissals and layoffs of irregular workers is all the more reason to doubt efficacy of the government’s proposal.
In order to solve the serious problems facing irregular workers, legislation that controls indiscriminate expansion and usage of irregular labor is needed, and one that is directed towards securing rights of workers. The fundamental problem for irregular workers is the indiscriminate expansion of irregular labor, whose existence itself increases job insecurity. Companies do not employ irregular workers only in cases that can be proven to be objective and rational. They employ them simply to minimize labor costs, facilitate layoffs, and avoid legal responsibility. Therefore, employment of irregular workers has to be strictly restricted. Regular workers should be employed for jobs that are needed continually, and irregular workers should be taken on only under objectively and rationally accepted circumstances.
The so-called “self-employed” workers, such as cargo truck drivers, remicon (ready-mixed cement) drivers, golf course assistants (caddies), home-visiting tutors, insurance recruiters, and telemarketers, as irregular workers, face job insecurity and deprivation from the various labor-related laws, although they are subjugated to specific companies and are compensated as workers. The companies try to evade legal responsibilities by avoiding direct employment, forcing them to register as self-businesses or subcontracting them. Therefore, it is essential that these “self-employed” workers are recognized as workers and that they are guaranteed the three fundamental basic labor rights.
The worker dispatch system, which during the six years of implementation has resulted in exploitation by “middle person” (temporary agencies), illegal dispatch, job insecurity, discrimination and deprivation of worker rights, must be abolished. Also, the principle of “equal pay for equal work” must be clearly written out in order to resolve discrimination.
The KCTU is angered by the government’s proposal. If the government and the Uri Party (ruling party) pushes forth with the current proposal without any revisions as suggested by the KCTU, then the South Korean government must accept the responsibility of having degraded all workers into irregular workers and deepened wage disparity and social inequality. The KCTU strongly urges the government to withdraw the current proposal on irregular workers and introduce a bill that would address all forms of discrimination by irregular workers in consultation with trade unions.
In 1996, the South Korean labor movement mobilized in large numbers against the then Kim Young Sam government when it “secretly and illegitimately” passed a series of revision of the labor law in the National Assembly. The current Roh Moo Hyun government should be warned that the South Korean labor movement will and can once again mobilize and launch a General Strike should the government fail to address the concerns of workers regarding the implementation of the bill on irregular workers as well as other legislative issues of importance to workers.
Conspiracy to Exterminate Regular workers:
“Violent Gale of Irregular Work versus Voting for a General Strike
KCTU Affiliates Shocked by Government’s Proposal on Irregular Workers
Up until July, when the KCTU and KDLP proposed a bill to guarantee rights for irregular workers, the issue of irregular labor was focused on eliminating discrimination and attaining regularization of irregular workers. However, on September 11, when the government announced its proposal to revise labor laws to address irregular workers, the entire atmosphere surrounding the issue of irregular workers has completely changed. The debate on whether to go on a “4-Hour Warning Strike” abruptly became a General Strike, as unanimously decided by the KCTU National Congress. The KCTU is now mobilizing all its resources towards the General Strike, starting with each member voting to support or not support the General Strike. Recognizing that not all workers at the worksite may fully comprehend the drastic ramifications of the government’s proposal, the KCTU has launched a series of activities to educate and publicize about the contents of the government’s policy as well as further outline the KCTU’s legislative program.
Below are the effects the bill is expected to have on each industry, and plans each KCTU affiliate has implemented towards the General Strike vote.
◇ Metal Industry
The rate of irregular workers has increased from 40% in 2002 to over 50% by the beginning of 2004. In the case of Hyundai Motors in Ulsan, the hiring of irregular workers is so prevalent that the Ministry of Labor has ruled that 20 subcontractors are using illegal dispatch workers.
Lee Sang Woo of the Korean Metal Workers Union (KMWU) pointed out, “The management has categorized direct production processes to be indirect, and thus there is possibility for abuse.”
This means that all production processes can be transformed into subcontracted ones. In fact, in the case of Dong-Ih Autos, which produces ‘Morning’ cars, apart from the 150 in management positions, all 800 workers are dispatch workers. From large corporations to small-and-medium enterprises, all positions will eventually be filled with irregular workers, particularly when the decrease in competitiveness is being used as an excuse for expansion in irregular labor.
Jeong Seong-Soo, Director of Education & Publicity at Mando Branch, showed his concern, “For now, we have a clause in our collective bargaining agreement specifying that new positions be filled by regular workers, however, if this bill is passed, then it is simply a matter of time before irregular worker is abruptly increased.”
All branches of KMWF have decided to hang banners with their four demands---elimination of irregular work, stop the South Korea-Japan Free Trade Agreement, stop deindustrialization, and guarantee occupational and safety issues for all workers.
As part of the KMWF’s mobilization towards the General Strike, it has launched several activities, including consultations within all the KMWU between October 14 -23. The consultations are to end on October 23 with a rally to mobilize for the General Strike. This will be followed by the union’s participation in cultural festivities calling for the abolition of the National Security Law. Members of the KMWF will go to the polls to vote on the General Strike from October 25 to 27. In addition, they 14 representatives of the union will be participating in the KCTU’s actions against the South Korea-Japan Free Trade Agreement negotiations from October 31 to November 4.
◇ Textiles and Chemical
In the textiles and chemical industry, regular workers work together with irregular workers, and the industry had already undergone restructuring in which a particular production process would be outsourced and then separated into an individual company.
Yoo Young-Goo, Executive Director of Education and Publicity stated, “Union members have already seen the management refuse creation of new jobs, while increasing the number of irregular workers. They use the excuse of operational difficulties and insist on the need to reduce the workforce. Workers feel threatened and their technological pride is hurt.”
As for Kumho Tires, whose rate of irregular workers is not as high, Oh Yoon-Young, Executive Director of Planning said, “The bill will trigger a rave of subcontracting that the company has been waiting to do. The extension to three years and prohibition on arbitrary layoffs is very appealing for the company.”
The Federation of Chemical-Textile Workers Unions has transformed national office into headquarters for the General Strike. All members will vote for the General Strike from November 2 to 3. The Federation plans to conduct a series of teach-ins for each affiliated union within the Federation to prepare for the General Strike.
The union has also decided to establish a special fund---1,000 Korean won contribution from each member---to support the Federation’s industrial actions after having experienced sever government repression during its recent collective bargaining agreement negotiations.
◇ Clerical and Finance
If the government’s proposed bill is legislated and short-term employment is increased, then the secondary finance sector, including insurance, securities, credit cards and cooperatives, will face serious repercussions. This sector had already gone through harsh periods after the International Monetary Fund’s Structural Adjustment Program and restructuring of the financial sector by speculative capital.
The problem of irregular work, particularly in the banks, is already extremely critical. Banks have enforced “voluntary retirement” en masse and then re-hired these workers as contract workers. They have also hired irregular workers for new job openings. The government’s proposal will basically be “pouring oil onto a hot fire
Lee Geun-Jae, General Secretary of National Life Insurance Unions, expressed his concern, “It may be difficult to separate management or budgetary jobs from the company. However, there will be more and more jobs, such as computer data entry, fielding call centers, and building maintenance that will be outsourced and contracted out. Also there will no longer be any legal barriers to filing all regular positions with irregular workers.”
The Korean Federation of Clerical and Financial Labor Unions (KCFLU) held its Central Committee meeting on October 13, where the Committee decided to implement a General Strike Vote, while demanding “balanced development of the financial sector.” The Committee promised to mobilize more than 40,000 workers for the General Strike.
◇ Public Services
No industry will be left untouched by the government’s proposal. Various forms of researchers in public institutions will be degraded into dispatched or contracted positions according to different projects. Elderly cleaners and janitors that work for local governments will be forced to live the rest of their lives as low-waged dispatch workers. Workers in the arts and culture will also become dispatch workers in the name of “guest troupe member” or “guest musician.”
In the case the railroad industry, the train conductor will now become a dispatch worker from a licensed management agency while the station managers will be outsourced. All jobs and positions will be transformed into indirect employment, and the idea of “public interest” will disappear. Furthermore, aviation, social services, and social insurance sectors will also be able to use dispatch or temporary workers. It is understandable when workers say, “If I were the owner, I would also subcontract and outsource. It’s all guaranteed by law.”
On October 13, the Central Committee of the Korean Federation of Transportation, Public & Social Services Workers Unions (KPSU) decided to transform its national offices into the headquarters for the General Strike. On November 4, a consultation will be held to organize votes for the General Strike in each of the 50 unions affiliated with the KPSU.
The Standing Executive Committee members and delegates will undergo at least one teach-in session while further plans have been made to strengthen educational activities on issues such as government’s proposal on dispatch workers and the elimination of discrimination against irregular workers, the South Korea-Japan Free Trade Agreement, and the South Korea-U.S. Bilateral Investment Treaty in order to mobilize for the General Strike.
The headquarters for the Counteraction Against Irregular Workers in the Public Sectors has published and distributed an educational booklet entitled, “The Effects of the Labor Law Revisions on Dispatch Workers on the Public Sector.”
◇ Health Care Industry
The government’s proposal is expected to have a particularly devastating effect on workers in the health care industry. Lee Jeong-Hyun, President of Kyungbook University Hospital Branch of Korean Federation of Hospital Workers Unions (KFHU), said, “There is fear spreading among members that doctors will receive year-based salaries, and nurses and technicians will be transformed into dispatch or temporary workers.” Lee continued, “Security and janitorial workers are already dispatch workers. If this bill is passed and dispatch work is allowed in all jobs including clerical work and nursing, then we might end up with different agencies according to job or ward.”
Choi Kyung-Sook, Director of Unorganized & Irregular Workers at KFHU, warned, “If our worries turn into reality, we will face a critical situation in which public health will be abrogated and union activities more difficult.”
The KFHU held its Central Committee meeting on October 6 and set its main struggle agendas as the following: stopping government’s proposal on dispatch workers, stopping the establishment of foreign hospital inside free economic zones and liberalization of health care; and strengthening public health. The union plans to conduct the General Strike vote from November 2 to 4. After which, the union hold a special Congress session to discuss and mobilize for the General Strike
◇ Construction Industry
There are those who argue that because the government’s proposed bill leaves out the construction industry, the government’s proposed bill itself will not have any significance on workers in the construction industry. However, the Korean Federation of Construction Industry Trade Union argue that legislation to protect irregular workers in the construction industry should be a priority, as 1.8 million out of the 2 million workers in the construction industry are irregular workers.
According to Han Eun Jung, Assistant Director of Policy and Research of the KFCITU, “If the bill is passed, employment in the form of daily contracts will be locked in, and furthermore, even field technicians, who are regular workers from large corporations that oversee constructions sites, can become contract workers.”
Even though the construction sector is on the negative list, there are chances that irregular work can expand among clerical workers because the dispatch labor system can blend in with the existing subcontract system.
In addition to conducting a vote for the General Strike, the KFCITU will be mobilizing workers in the construction industry for the General Strike. The union will also be conducting several educational sessions on the General Strike at worksite all over the country.
Producers play a major role in the production of television programs; however, not many people realize that the majority of these producers are irregular workers. It is obvious that if this is passed, then even more programs will hire irregular workers as producers. It will also be difficult to avoid experienced reporters becoming contracted ‘freelance’ journalists and reporters. There is also fear among media workers that dispatch workers will spread to all positions within the industry.
Kim Seong-Geun, Director of Organizing at Korean Federation of Press Unions (KFPU), stated, “Before, broadcasting companies took the easy way and used outsourced production agencies, while putting the company’s name on the producer’s name card. However, companies can now legally use dispatch workers. If unions do not counteract this move by the government, then workers, whose workload is already full to the brim, will have even more work.”
Following its Central Committee decision of October 5, the KFPU will implement teach-ins for union members during October and November on the three legislative demands for reformation of the press, and will actively mobilize votes for the General Strike.
◇ Services Sector
Problems of contingent labor in distribution and retail services, such hotels, department stores, golf courses, restaurants, tourism, auctioning, and private security, are already very serious, with the rate of irregular workers at 70 to 90%. In 2003, 94% of the workers in the restaurants and accommodation services were irregular workers while 72% of the workers in the retail industry were irregular workers.
The dispatch workers, whom agencies send to various shop branches, are not even statistically visible. Because these services are highly sensitive to fluctuations of the economy, not only temporary or contract workers, but also part-time workers are prevalent. There is also a growing tendency to use contracted workers as golf course assistants.
Lee Sang-Gyu, Director of Policy at Korean Federation of Private Service Workers Unions (KFPSWU) said, “If this bill is passed, then large hotels or retail service that currently employ regular workers will be able to replace their regular workforce with irregular workers much easier than in the past.”
Although the rank and file members of the KFPSWU may not be able to participate fully in the General Strike, the Federation is preparing for the all-out struggle in November holding a series of consultations with the KCTU leadership as well as conducting activities to educate union members and leaders about the objective of the General Strike.
◇ Women Workers
Many women workers, including contracted janitors and those in sales, have already been transformed into irregular workers, and the situation for them cannot get any worse. However, the hopes of women workers to rid of illegal dispatch and to gain direct employment will evaporate as soon as the government’s proposal is implemented. The Korean Federation of Women Workers (KFWW) believes that there will be no difficulty in mobilizing its members for the General Strike, as the issue of contingent labor is such a critical one for the Federation. The Federation will vote on the general strike on October 25.
The transportation sector has some differences compared to other sectors, but will nonetheless be affected by the bill. Kim Seong-Hwan, Director of Policy at Korea Federation of Taxi Workers Unions (KFTWU), pointed out, “Taxis have a separate law so the law on dispatch work may not affect the entire sector, however, it is evident that contracting will become more frequent if the government’s proposed bill is effectuated.”
Following the KCTU’s guideline, the Federation held its Central Committee meeting on October 8 and decided to vote on the General Strike and organize its members accordingly.
Choi Kyung-Soon, Deputy General Secretary at Korean Bus Workers Union (KBWU) said, “Local governments are involved in the bus industry so the affects of the bill will not be too big. However, the Seoul City is operating buses as a semi-public business, and it is trying to cut down the subsidy to bus companies by decreasing the number of drivers or cutting labor costs. If the law on dispatch workers is introduced, then we cannot rule out the possibility that the city will start using contract drivers.” The KBWU will vote on the General Strike between October 25 to November 6.
The Korea Cargo Transport Workers Federation (KCTWF) is also scheduled to formulate detailed plans according to KCTU’s guideline.
On October 16, unions in the transportation sector started its struggle of the second half of the year by organizing a joint rally entitled “Transportation Workers (cargo truck drivers, taxi driver, and railway workers) Rally to Attain Livelihood Rights, Implementation of Agreement between Government and Workers and Institutional Reformation.”
The Korean Teachers and Educational Workers Union (KTU) will organize branch assemblies and go to the ballots for the General Strike. Amidst pending struggles such as that on revision of law on private schools, it will actively mobilize for the strike and participate by leaving school early.
Korean University Workers Union (KUWU) discussed its plans for the General Strike at its Central Committee meeting that was held on October 20. It will perform teach-ins for union leaders on October 26 and then for rank and file workers from October 27 to 29. It will then vote for the General Strike.
According to one union member, “If the bill is passed, irregular employment, so far limited to janitorial or care taking jobs, will expand to all jobs. Regular work, which we had gained by fighting during collective bargaining, will be lost.”
The Korean Professors Union (KPU) is coming up with plans on the issue, as well as continuing their struggle to revise the law on private schools, to eliminate university corruption and to gain legality of their union. They have set a period for all-out struggle from November 3 to 10. They will vote the General Strike during this time.
KCTU Policy Paper
The KCTU Response to the South Korean Government and Big Business Promotion of Free Trade Agreements
Background and Strategies in the Drive for Free Trade Agreements
The speed to which the South Korean government and capital are promoting Free Trade Agreements (FTAs) is becoming hard to catch up. The South Korea-Chile FTA has already been consolidated, the South Korea-Japan FTA and the South Korea-Singapore FTA, aimed at concluding in 2005, are currently being negotiated, and negotiations for the South Korea-ASEAN FTA are scheduled to officially take off next year. The government has announced its ‘roadmap’, which states that in the mid to long term it will promote FTAs with the United States, European Union, and China, and also a Korea-Japan-China FTA, and regional integration of East Asia.
There is a timely element in the background to the promotion of all these FTAs by the South Korean government and capital---the so-called “change in the external trade environment.” This refers to external factors such as the expansion of regionalism based on FTAs across the globe, and the repetitious failure of the WTO ministerial meetings that is leading to loss of faith in the multilateral trade regime. Thus, there is a fear that South Korea will lose out and be isolated if it does not join the “FTA trend.” Under these premises, the South Korean government is promoting a strategy to negotiate ‘multi-track’ FTAs.
However, we must also be aware that there is a strategic factor involved---FTAs are being encouraged under the strategy to “establish a paradigm of an open trading country” on which to base its plans to become “the hub in Northeast Asia.” These are strategic choices that the South Korean government has made, in order to facilitate integration into the process of neo-liberal globalization and to continue its domestic restructuring programs.
The “paradigm of an open trading country” is the result of pushing the traditional export-oriented economic development strategy to the extremes, in consistency with the process of neo-liberal globalization. It is an idea to sacrifice domestically oriented sectors, public sectors, agriculture and small to medium manufacturing enterprises, while maximizing the profit of a handful of transnational chaebols and a few competitive export-oriented sectors. In other words, it is a plan to develop new engines for economic growth by transforming the economy to a knowledge-based one, and by selectively developing major sectors that will promote economic growth, such as display technology, semi-conductors, futuristic automobiles, mobile communication, and bioengineering, at the same time maintaining competitiveness of some exporting sectors. FTAs are considered to be proactive strategies in establishing the environment and momentum to promote these structural reformations. This will be a process to complete the neo-liberal restructuring of the South Korean economy.
This strategy is the result of a combination of various factors, such as the dilemma on how to survive amidst the pressure from neo-liberal globalization regime, the increase of domination of transnational capital over Korean economy, and the transnationalization of South Korean chaebols. However, the ruling bloc within South Korea has not completely come to a consensus on this strategy. In particular, considering that the FTA roadmap declared by the government is directed towards the major economies including United States, European Union, and Japan, and that capital is also being cautious about the effects of these FTAs, it is likely that questions will be constantly raised within the ruling bloc on the content, method and speed of this strategy. This is evident from the fact that capital is showing a passive attitude towards the presently negotiated South Korea-Japan FTA.
This strategic choice of the South Korean government and capital may lead to growth in economic size, but one without increase in jobs nor domestic consumption, and will bring devastating consequences such as institutionalization of unemployment and job insecurity. Furthermore, the establishment of “paradigm of an open trading country” has, as in essence, the completion of a regime based on liberalization and accumulation of profit for financial capital.
This will lead to complete domination by transnational financial capital of the South Korean economy, and the collapse of national economy and the social sectors. Now is the time to construct an alternative paradigm, in which rights of workers are ascertained, jobs created and poverty seriously dealt with. It is the time to build a paradigm in which the need for co-existence and cooperation amidst diversity is recognized regionally and internationally. The FTAs merely direct us in the opposite direction.
Background to the South Korea-Japan Free Trade Agreement (KJFTA)
The KJFTA is one of the fundamental strategies that the government and capital have adopted, in order to transform the paradigm of the South Korean economy into one of “open trading country,” to integrate South Korea fully into the neo-liberal regime, and to continue propelling and encouraging restructuring. The South Korean government and capital, on one hand, supported the International Monetary Fund’s Structural Adjustment Program so as to guarantee its prevalence and perpetuity according to the rules of the market, while at the same time, promoted mid to long term plans to more closely adhere South Korean economy to the global financial market.
This was a strategic choice that South Korean capital made, in a situation where ‘industrial policies’ and the ‘national development’ model based on intervention of the United States to prevent opening of East Asian markets no longer functioning. It is also aimed at giving more privileges to transnational capital and adopting additional business-oriented policies to ensure a more favorable environment. This strategy has taken on the form of the plan to become “the hub of Northeast Asia.”
The first step that the president Roh Moo-Hyun took to realize this plan was to legislate the Bill on Free Economic Zones (FEZ) and to ratify the South Korea-Chile FTA amidst strong resistance from South Korean farmers. The Bill on FEZ abolished paid monthly leave, while changing weekly and menstrual leaves into non-paid ones. It also expanded the boundaries of dispatched labor, limited collective action of workers, and allowed evasion from performance requirements such as employment of disabled or elderly.
As for the South Korea-Chile FTA, it is a well-known fact that it destroys food sovereignty and threatens livelihood of farmers. We can perceive from these examples that the series of neo-liberal policies of the government and capital were indeed made under strategic considerations.
The KJFTA is a project of government and capital to actively integrate South Korea into the process through which Japan seeks to restructure the East Asian region centered on Japanese capital, and to provide a way for survival in the neo-liberal world capitalist order. Even though capitalists acknowledge that in the short run trade deficit will worsen under KJFTA, they are nevertheless pushing forth with the FTA in order to promote restructuring of major industries with over-investment, such as automobiles, machinery, steel, electric and electronic goods, under the logic of ‘enhancing efficiency through competition’ or ‘strategic alliance with advanced companies’. Domestically, capital concentration for jaebols would be strengthened while in the long run South Korean capital may gain something from the new economic order in Northeast Asia centered on Japanese capital.
The KJFTA is also an important medium in transforming the South Korean economy into one based on speculation, with only a shell but without substance, as part of Roh Moo-Hyun’s so-called “Northeast Asia Financial Hub Strategy.” This plan refers to the plans to develop South Korea into a financial hub of Asia, to give privileges to encourage influx of transnational capital, and to secure activities of national financial capital by using pension funds as warranty. The KJFTA will provide the most appropriate environment for Japan to use its assets including financial assets, lead to destruction of South Korean manufacturing sector, and eventually transform Korean economy into a speculative parasite economy.
How will the KJFTA affect Workers?
① It will destroy the reproduction base of national economy
The major industries of South Korea and Japan---such as automobiles, machinery, steel, electric and electronic goods---are mostly in competition with each other in the world market. Japan, as world’s largest provider of capital resources, is far ahead of South Korea in terms of technological competitiveness. Consolidating a FTA in this situation will grant Japanese companies the additional benefit of cost competitiveness, while bringing South Korean major industries to ruin.
If we look at the present level of tariffs on major industries, for automobiles and automobile parts it is 8%, for electronics 8%, machinery 7.9%, metal 7.3%, oil and chemicals 7.7% and other manufacturing sectors 7.2%. On the other hand, for Japan, it is either zero or very low---automobile and parts, other transport machinery and electronics 0%, machinery 0.2%, and metal and oil and chemicals 3%.
Therefore, if the KJFTA is implemented and tariffs eradicated, Korean major industries will become bankrupt or pressured into international M&As and abrupt restructuring. It can also lead to grave circumstances in which national businesses can move to other countries, such as China, worsen the process of deindustrialization, and demolish any possibility for an independent national reproduction base.
② It will lead to mass restructuring and job insecurity, unemployment and expansion of unstable labour
The KJFTA will turn the South Korean economy into a shell without substance. Machinery, automobile, and electric & electronic industries, which are important in the South Korean industrial structure, will be pushed into unconditional competition with Japan. This process will be accompanied by extreme restructuring measures under the name of enhancing efficiency through competition, increase in economic size, and solving problems of repetitious over-investment.
As was the case during the economic crisis and the IMF’s Structural Adjustment Programs, this process will cause mass unemployment and job insecurity, and regular workers from the manufacturing sector will move to services sector as irregular workers. Under the IMF regime, the brunt of heavy international competition has been borne by the most marginalized workers. With the KJFTA, the cost of competition pressure will be passed again onto the workers and the people. We have already experienced all this under the IMF regime.
③ The KJFTA will deprive workers of their rights, which they had gained through historical struggle for democratic unions.
The governments of South Korea and Japan are, at the moment, negotiating for a FTA between the two countries. The negotiations are based on the Joint Study Group Report on KJFTA, which was publicized last year. We cannot help but show our consternation at the report of the Non-Tariff Measures (NTM) Subcommittee of the Joint Study Group, attached at the annex of the report.
According to this report, the following are recommendations made by the NTM: to further efforts by the Korean Labor Commission to resolve labor-management disputes, to guarantee the “no work, no pay” principle, clarification of employers’ obligation to buy back workers’ unused vacations,
greater flexibility in the calculation of retirement allowances, and strict and swift measures against “illegal activities” of trade unions.
These demands from Japanese capitalists were already proposed during the negotiation process for the South Korea-Japan Bilateral Investment Treaty, under the name of “Serious Clauses.” It is expected that the Japanese side will demand for these clauses more fervently during the FTA negotiations. These “recommendations” are a fundamental negation of workers’ basic rights, which the South Korean labor movement has fought for and gained through a series of historical industrial struggles. They also symbolically reveal how FTAs of the neo-liberal era can be so antagonistic towards workers. As thus, the KJFTA will be devastating for workers in both South Korea and Japan, and it will attack the economic and democratic rights of people in both nations.
The KCTU’s Demands
· The government and capital must stop its strategy of blindly promoting multiple FTAs and must reassess how neo-liberal FTAs affect the South Korean economy and society, together with trade unions and other civil society members.
· The government must also immediately stop the KJFTA negotiations that are expected to bring devastating results to workers and the people.
· The government must disclose all contents related to the KJFTA negotiations and establish a transparent and democratic consensus process.
· Democratic policies on the South Korean economy and industry, based on eradication of poverty, creation of jobs and security of workers’ and social rights, are needed. Instead of the unconditional neo-liberal “reforms,” we need economic policies that stabilize the lives of workers and democratic participation in policy-making decision must be guaranteed.
· Regional cooperation for co-existence and co-development is necessary. We need to seek an alternative regional agreement, based on peace and cooperation, contribution to the peace on the Korean peninsula, equality between countries and fundamental democratic principles.