KCTU Newsletter: Ministry of Labor, Chaebols, Layoffs, MTU

Korean Confederation of Trade Unions (KCTU)
Monthly Newsletter
The Second Edition, 2008


KCTU Position on the Ministry of Labor’s 2008 Report to the President


1. On the 13th of March, the Ministry of Labor stated in its report to the President that it would focus on the advancement of industrial relations as the main driving force behind improving the economy and creating new jobs. The Ministry's 'advancement of industrial relations' signifies cooperation between employers and workers, at the center of which is restraint from strikes and pay raises on the part of the unions. It has been presented to buttress the Lee Myung-bak government's economic policy and in essence, forces the workers to make unilateral sacrifices. This is unacceptable in a situation where inflation means that real wages are decreasing and irregular workers can barely scrape by with making only 1200$ a month on average. With economic polarization deteriorating by the day, the employment stability of the irregular workers and wage increases for them are in order, but the Ministry of Labor has continued to present policies in line with the market principle of the Lee government. The Ministry has forgotten that it needs to represent the rights and interests of the 14 million workers in this country, and has solely stressed pro-corporate policies that are designed to increase labor flexibility.

2. The Ministry of Labor also stated that it would resolve industrial disputes based on the principle of the rule of law, and come up with a tailored response to various types of conflicts in order to further this type of industrial cooperation. Even though restraint of demands for wage raises and the urging of no strikes in effect constitutes a violation of basic labor rights, this statement has taken the position that it will repress with state power collective action, as in the case of Koscom. However, the reality is that after the irregular workers' bill went into effect last year, mass lay-offs have ensued and despite clear demonstration of unjust labor practices by the employers during this process, the government has failed to take measures to reprimand non-compliance, and has rather stepped up oppression of collective action. The Ministry had previously announced that it would deal severely with illegal acts regardless of whether they were perpetrated by the employers or workers, but has deleted articles in the industrial relations act that stipulate unjust lay-offs on the part of the employers will be dealt with the criminal code. This means that even when an employer unjustly lays-off a worker in order to intervene in trade union activities, this act cannot be disciplined according to the criminal code, while collective action on the part of the workers can be punished under the name of obstruction of business. Taking this into account, the Ministry of Labor's principle of the rule of law is likely to translate into unilateral repression of just struggles on the part of workers for guarantee of rights and their livelihood.

3. The Ministry of Labor has stated that it would come up with various complementary measures, including revisions to the law and institutional changes, in order to resolve the issue of irregular work. However, such changes are being pursued with the flexibilization of labor as the objective, and would expand irregular work and not contribute to protecting their rights. The problem with the current irregular workers' bill is that it is impossible to attain irregular workers' employment stability by simply limiting the period of their use, and that you need to limit the grounds on which precarious work can be used in order to do so. However, the Ministry is adhering to the line that the period of irregular workers' can be used needs to be extended from 2 to 3 years: the employers' position. Moreover, the Ministry of Labor is planning to expand the areas in which dispatch work can be used, which is a clear sign that it seeks to further neo-liberal labor flexibilization, and thereby exacerbate the employment crisis which the irregular workers face.

4. The Ministry of Labor has announced plans to improve the wage system from one based on seniority to one based on productivity, and also for the expansion of flexible work schedules for a revitalized labor market. Flexible work schedules is a employer-centered institution which forces longer working hours onto the workers, and which also cuts their wages. A wage system based on technical proficiency and level of skill at the industrial level is the right path, while one based on productivity can lead to wage cuts for older workers. Changes to the wage system and working hours are issues that have a direct effect on the wages of workers, and should never be decided upon uni-laterally. It should be decided at the industrial level by applying the principle of equal wages for equal value labor in order to reduce wage disparities.

5. Coverage through the industrial accident insurance is due to be extended to specially employed workers such insurance salesmen, golf caddies, cement mixer drivers, and home study teachers. However, the number of specially employed workers, resulting from diversification of the economy, is not just limited to these workers but also includes quick delivery workers, screenwriters, dump truck drivers, tele-marketers and others. Industrial accident insurance, as a form of social insurance, needs to be extended to all these workers. ■

[Comment] Relaxing the separation between financial and industrial capital : the Lee Myung-bak government goes all out for the Chae-bol

April 2nd, 2008

Corporate taxes will be lowered, public corporations will be privatized, and now the restrictions industrial capital owning financial firms will be lifted. There is no end to the pro-chaebol policies of the Lee Myung-bak government. The national finance committee, in its report to the President on the 31st of March, made official its three-stage plan to relax the laws which had restricted industrial capital from owning banks.

With the crisis management abilities of financial institutions yet untested, and a transparent and rigorous monitoring system still not in place, allowing industrial capital control over banks and thereby allowing banks to become bigger in size would not increase competitiveness, but rather raise the level of risk in the financial sector. Taking into the account the illegal practices of the chae-bol and their culture of collusion, a downgrading of financial transparency is a real possibility. In the case a chae-bol conglomerate finds itself insolvent, market logic dictates that a bank that has lent to it stop additional lending and attempt to recover the money. However, what bank owned by a chae-bol would be able to turn against its mother company if the restrictions between industrial and financial capital were relaxed? The bank would then delay recovering the funds, with the company potentially going into further debt. The situation could lead to tax money being injected to save the chae-bol and bank in order to rescure it, with re-structuring programs being instituted that would seriously effect the workers. This is exactly what happened with the Daewoo securities, which was mobilized to try to save the Daewoo group from falling into further crisis.

The relaxing of such regulations also leads to concern that financial firms could be abused to become the monetary source for reckless expansion into other areas of business, while they could also be mobilized to strengthen chae-bol control over subsidiary companies through circular/mutual financing. The most salient example of such practices was the circular financing between the Samsung group's subsidiaries. This method of financing connected various subsidiaries in a ring of complex mutual financing(‘Everland- Samsung Life Insurance- Samsung Electronics- Samsung Card -Everland') and allowed the Lee family to retain control over the Samsung group. With restrictions on financial firms controlling non-financial enterprises, Samsung Life Insurance had been forced to lower the percentage of stocks it owned in Samsung Electronics. If these restrictions and regulations are revoked, it will open up the way for Everland to restore the circular network of control that it had previously had. Everland's largest shareholder is an individual: Lee Jae-yong, the son of Samsung Group chairman Lee Kun-hee. This is the reason why the Samsung Economic Research Institute has constantly called for the relaxation of regulations and restrictions governing the relationship between industrial and financial capital.

In the end, the Lee Myung-bak government's policies regarding such regulations will only strengthen the monopolistic control of the chae-bol, while consolidating their inner control structure. It is the clearest sign yet that its policies are geared toward solely the chae-bols. ■

[Statement] The lay-off of 99 Allianz Life Insurance workers is the responsibility of the Lee Myung-bak government

April 1st, 2008

The administrative committee at Allianz Life Insurance has decided to lay-off the 99 trade union members that have been on strike. This is a clear case of unjust lay-offs and needs to be immediately retracted. Those responsible also need to be held accountable. The 99 workers were all managers of branch offices, but they were legally trade union members with the right to strike. Nevertheless, management decided on their dismissal after the Minster of Labor stated that they "were not subjects that could join a union." The grounds for dismissal were identical to the Minister's comment. In effect, the Minister of Labor has taken sides with the managers and shown a disregard for legal rights that has lead to mass lay-offs.

Allianz Life Insurance acquired Che-il Life Insurance in 1999, and has gone through a restructuring process that has seen the number of employers decrease to 1600 from 2700. They are now attempting a second round of re-structuring by implementing a performance based pay system. However, the employers and union had previously agreed "to implement a performance based system that is acceptable to both management and union" in 2005 and again in 2006. The strike was sparked when the company broke the agreement in Jan of this year and tried to force through the new wage system. The breach of agreements between management and employees is itself illegal, as are the lay-offs.

According to the Lawyers for a Democratic Society, those that have been laid off are sales managers that have only had their titles changed, and "the Ministry of Labor in the past has recognized trade unions formed by sales managers, and recognizes them at most companies as trade union members." Moreover, Supreme Court rulings in 2003 and 2004 have confirmed that trade union membership of branch managers is legitimate, rendering the Allianz employer's argument that branch managers aren't entitled to basic labor rights because they are part of management groundless.

Regarding such unjust labor practices by the employers, the Lee Myung-bak government much touted 'principle of the rule of law' has disappeared. What's more, the labor minister has taken the lead in siding with the employers while disregarding basic labor rights, further reinforcing the Lee government's 'principle' of favoring the employers. The KCTU urges the Allianz Life Insurance company to revoke its unjust lay-off of workers and to take back the new performance-based wage scheme which it had uni-laterally forced upon the workers. We also urge the Ministry of Labor to intervene to stop the repression of the workers and call on the government to recognize the unjust nature of the current situation at the company and take measures to correct them. Ignoring such calls will result in the KCTU, in solidarity with the Allianz Life Insurance union and the KCFLU(KOREAN FEDERATION OF CLERICAL & FINANCIAL LABOR UNIONS ), organizing a national struggle on the issue. ■

MTU Continues the Struggle for the Labor Rights of Undocumented Migrant Workers

Since 2005, when the KCTU-affiliate, the Seoul-Gyeonggi-Incheon Migrants Trade Union (MTU) was first formed, the South Korean government has been trying to stop its activities. The government claims that because MTU’s leadership is made up mostly of undocumented migrant workers, it does not have the right to legal union status. Repression against MTU increased last November with the arrest and deportation of MTU’s president, vice-president and general secretary all at the same time in a targeted crackdown. MTU was not silent in the face of this attack. Supported by KCTU, the Korean labor movement and Korean civil society, we responded with a sit-in protest that lasted over three months, culminating in a mass protest on 24 February, attended by over a thousand migrant workers, Korean workers, activists and Korean citizens. At the same time MTU carried out an intensive campaign to reorganize our chapters and branches, which had been severely weakened to the government’s crackdown against undocumented migrant workers and its targeting of MTU.

MTU is now ready to push forwarded to expand our work and continue to strengthen our union. Our sit-in protest concluded on 11 March with closing ceremony attended by supporters from all sectors of the labor movement at which MTU’s acting leadership, union members and supporters made pledges for continued struggle in the future. Many MTU members have also come forward as leaders elected in chapter and branch elections, demonstrating their courage in the face of continued repression. On 6 April, we also held our general assembly to elect our new president, vice presidents, general secretary and other central officers and adopted our organizing and campaign plans for 2008.

The road ahead is not easy. After the Seoul High Court ruled last year that undocumented migrant workers’ right to freedom of association is protected under South Korean law and MTU therefore deserves legal recognition as a union, we are now awaiting a Supreme Court decision. However, recently on March 19, President Lee Myeong-bak made a statement that a union by undocumented migrant workers would not tolerated, clearly referring to MTU. This statement demonstrates that the Supreme Court ruling is by no means a foregone conclusion in our favor; it will take our determined effort and support domestically and internationally before MTU’s legal union status and the right of migrant workers to union organizing is respected.

Last December KCTU filed a complaint with the ILO Committee on Freedom of Association concerning MTU’s case. It is clear that the complaint and MTU’s struggle has already received considerable attention from the international labor and human rights communities. This was demonstrated on 18 March when MTU spoke at a side event at the 7th Session of the UN Human Rights Council co-sponsored by Migrant Rights International, Forum-Asia and KCTU. MTU and KCTU are also planning am international campaign to further raise awareness about MTU’s case and build support for the right to freedom of association of all migrant workers regardless of their immigration status. Through this campaign we seek to demonstrate that MTU’s struggle is not only for migrant workers in South Korea, but a struggle to win recognition for the labor rights of migrant workers worldwide. ■