Question

Why do you think South Korea has developed a tradition of strong unions when most of the rest of Asia has not? How will this impact your business dealings in the country?

(Please type answer as I have trouble reading people's answers)

Answer 1

Answer: South Korea represents a modem miracle of rapid industrialization and unprecedented economic growth.  South Korean employees used to work under repressive labor standards and, historically, labor unions have been subdued by government and business. A business-government nexus was forged by the State's active intervention in business matters. Government "rewarded" entrepreneurs who complied with its policies by publicly honoring them and permitting them to become wealthy. In return, the government received legitimacy and political support from the chaebols. The State's collusion with business has led to severe repression of workers' rights to organize and engage in collective action.

The most conspicuous characteristics of Korea’s modern trade union movement and industrial relations are: 1) persistent development of enterprise-based unionism, which is not common in advanced and newly industrialized countries, 2) a militant labor movement, and 3) confrontational industrial relations, led mainly by large companies. These characteristics emerged as a by-product of the rapid process of industrialization during the last half century, and they are clearly distinguishable from the cooperative enterprise-based industrial relations of Japan, which went through a very similar industrialization process. Union movements grew explosively, boosted by the democratization movement that started in June 1987. The Korean labor market started to show a sign of segregation from 1987, as wage increases and improvements in employment conditions were achieved at large companies through large-scale industrial disputes. The ratio of average wage between large companies with 500 or more employees and small ones with fewer than 99 employees increased to 122.5:100 in 1990 from 102.9:100 in 1987.

At present, There are two national trade union centres in South Korea: the Federation of Korean Trade Unions (FKTU) and the Korean Confederation of Trade Unions (KCTU). In 2007, the FKTU had 740,308 members (43.9% of trade unionists in Korea), the KCTU had 682,418 members (40.4%), and 265,056 workers were members of independent trade unions affiliated to neither national centre..

After the liberation from Japanese rule in 1945, there existed only one legal trade union federation in Korea, the Federation of Korean Trade Unions (FKTU). Park restructured the unions, permitting only those he and his regime regarded as "loyal" to their cause.. As a result, the labor movement became very fragmented; nevertheless, it continued to operate through localized unions, such as the miners, textile workers, anti-government activists, and various Catholic groups.

Despite the internal struggles and factionalism of KCTU, their methods were nonetheless highly effective. In the early 1990s, there was a shift from domestic growth to national competitiveness: one of the major economic policies of Korea became "growth first, and distribution later." The KCTU regarded this as detrimental to the interests of the workers, and adopted the counter-policy of "strike first, bargain later." Korean workers used strikes as a weapon to seek political change, better working conditions, and for higher wages. In 1996, a significant event occurred that would catapult the KCTU to both national and world stage. The New Korea Party, led by President Kim Young Sam, unilaterally passed and amended labor laws without the presence of the opposition party in the middle of the night, in a six-minute session. It has been estimated that the three weeks' strikes cost $3.4 billion in lost production President Kim Young Sam, recognizing the growing popular support for the KCTU, decided to revise the laws and to meet with opposition leaders. In March 1997, parliament passed a more diluted version of the labor laws and the President's chief economic adviser, who was the protagonist of the earlier laws, was fired along with other advisers. Finally, during a meeting with the opposition leaders, President Kim stated that the KCTU would be legalized.

The atmosphere has changed a lot in companies in the Korean Metal Workers’ Union of the KCTU since the inauguration of the new government. Workers’ voices have been raised to a significant extent in those companies. One of such examples is Hyundai Motor Company. This company and its workers had their fourth round of wage negotiations for this year on May 11, the day after the inauguration. There, Park Yoo-ki, head of its labor union, declared that innovative labor-management relations hinge on the management’s will and he will wait and see how relations between the government and the union and the management and the union will change under the new government. Earlier, the labor union demanded the payment of 30% of the company’s net profit as bonuses for its members along with employment guarantee and retirement age extension. These are quite burdensome on the part of the automaker in that its sales in China dropped by 14% in the first quarter of this year and its operating profit ratio hit a record low of 5.5% in 2016.