Pest analysis south korea

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Pest analysis south korea

  1. 1. PEST Analysis of Industrial Relationsin South Korea in 20th CenturySubmitted to – Dr. Shailendra NigamSubmitted By –Swimmi AlaskaNirankar Singh RoyalAnushkaAgarwalDeepika SharmaMahimaGoyalSaurabh Kumar
  2. 2. The industrialization of South Korea can be illustrated in following stages. We have tried tocapture the political, social, economic and technological influences with respect to each era ofindustrialization –1) Liberation of South Korea, Emergency of Chaebol and trade Union Movement: 1945 – 1950s2) From competitive capitalism to monopolistic capitalism of Chaebol: 1960s – 1980s3) Transition from an Authoritarian to a Democratic Political Economy: Mid 1980s – 1990sIn the late nineteenth century, an organizedlabor movement was formed by the development of awage labor class in the course of Korea‟s transition from a feudal to a modern capitalist society.Before its colonization by Japan in 1910, what now constitutes Korea was the feudal kingdom ofChosen, ruled by the Yi Dynasty from the fourteenth century according to a rigid Confucian codeof personal and social behavior. Chosun‟s feudal system was maintained by a hierarchical,authoritarian class structure, rigidly stratified from top to bottom into the Yangban (ruling class),the Jungin or Seoin (middle class), the Sangmin (peasant farmers and craftsmen) and theCheonmin (underprivileged class).Feudal Korea had an agricultural economic base: landlords leased their agricultural land to tenantfarmers for a fixed share of production; and, handicrafts were made in Sangmin and Cheonminfamily workshops. The first indications of a developing wage labor class can be traced to the lateeighteenth century when the feudal structure began to break down as a consequence of new, lesslabor-intensive farming methods being adopted. These methods resulted in an increasingconcentration of land ownership by larger landowners, tenant farmers and businessmen, andtriggered the exodus of subsistence peasant farmers over the succeeding decades to emergingeconomic sectors, especially mining. The ruination of agricultural lands by natural disasters, aswell as the levying of exploitative taxes by the ruling class, was additional factors contributing tothe exodus of the peasants from the land in the late nineteenth century.The development of a wage labor class was accelerated by the Japanese opening up ofKorea in 1896 and its military annexation in 1910. Imperial Japan used Korea to supplement agrowing shortfall in primary products necessary to fuel the industrializing Japanese economy.This was affected by the large scale occupation of Korean public and private lands by theJapanese under the Sanmijeungsan Gyeahoeg programme (Plan for the Increase of RiceProduction). It resulted in a mass exodus of Sangmin and Cheonmin from agriculture. At thesame time, the Korean economy was industrialized to enable the development of Japanesemonopoly capitalism. The mining, transport and maritime industries were the first to bedeveloped and the first to absorb the landless peasants. By 1928, city-based, daily-wage workerscomprised 57.5 per cent (653,552) of all wage workers with construction and related workerscomprising 37.2 per cent (422,543) of the total workforce. In the 1930s, in order to support the
  3. 3. Japanese munitions industries, Korean manufacturing was rapidly expanded so that by 1940 itemployed a workforce of 295,000.Low wages and hazardous working conditions contributed over time to the formation ofKorean trade unions. The first modern trade union, the Seongjin Stevedores‟ Union, wasformed in 1898, and otherssoon followed. Spontaneous strikes were also organized by theemerging trade unions. Despite these developments, union action was mostly fragmented andregionally based, and strikes were often broken by the state and employers. However, during theJapanese colonial period, especially in the 1920s, the trade union movement developed a nationalorganization with the support of nationalists and socialists.Two major factors account for the participation of nationalists and socialists in the emergingKorean trade union movement. First, in the Japanese colonial economy, Korean workers werediscriminated against and were paid only between 40 and 50 per cent of wage levels of Japaneseworkers. In the second, under Japanese colonialism just one per cent of Korean workers enjoyedan eight hour day, while 46.9 per cent worked more than twelve hours a day. The worst workingconditions were in mining, where accidents increased from 1,210 in 1924 to 8,571 in 1938. Suchconditions were a major contributor to the growth of anti-Japanese sentiments, and of nationalistand socialist groups.Furthermore, the Russian Revolution in 1917 influenced socialist groups to seek theassistance of trade unions as political allies in the struggle for the liberation of Korea.Nationalists and socialists found a common cause in opposing the colonial authorities‟exploitation of labor. As a result, union membership increased and trade unions were able toexpand to establish national or industry-based organizations, such as the ChosunNodongkongjeahoe (The Chosun Labor Fraternal Association) in 1920, the ChosunNodongyeonmeainghoe (The Chosun Labor Confederation) in 1922 and the Chosun NonongChongyeonmeaing (The Chosun Labor and Farmer Confederation) in 1924.The development of trade unions gave rise to an increasing number of protests against lowwages, poor working conditions and racial discrimination favoring Japanese workers. Thenumber of strikes had increased from 81 involving 4,599 workers in 1920 to 1,608 involving18,972 workers in 1930.The Political Economy of the Liberation of Korea, the Emergence of the Chaebol and theTrade Union Movement: 1945-1950sThe liberation of Korea in 1945 coincided with the start of the Cold War which, among otherthings, resulted in the division of the Korean peninsula by the two ideologically opposed camps,the USA and the USSR. The economy of North Korea was structured along communist lines
  4. 4. with political backing from the USSR, while South Korea was chosen to exemplify democraticcapitalism, initially under the rule of the United States Army Military Government in Korea(USAMGIK or, more simply, AMG). In South Korea, the „right wing‟ ruling class,comprising former Japanese collaborators, landlords and capitalists, were given politicalhegemony by the AMG as a countervailing force to communist North Korea. In 1948Seungman Rhy, who represented these interest groups, was elected President of the FirstRepublic of Korea.The state‟s economic policies involved the formation of close ties between the state andchaebol. The chaebol was chosen by the state as the main private agency to construct a moderncapitalist society and a variety of political and economic benefits were provided by the state tothe chaebol to facilitate their business activities and encourage economic development. Forexample, after liberation, the Japanese legacy of factories and lands were distributed by theAMG and the Rhy government to their political supporters on the exceptionally favorable termsin order to build a primitive capitalist economy as a bulwark against North Korea. Thisdistribution of the Japanese economic legacy was the basis for the emergence ofmonopolistic capitalism in the form of the chaebol from the 1970s onwards. Alldevelopments in the Korean political economy facilitated the subordination of the trade unionmovement in Korea to the interests of capitalist and an authoritarian state from this timeonwards.In 1945, following liberation from Japan, industrial relations in Korea experienced a dramaticpost-liberation growth by leftist trade unions and an upsurge of industrial conflict. In November1945,the socialists organized the Chunkuk Nodongjohab Pyungeuihoe, or Chun Pyung(National Trade Union Council) structured along industry lines in close association with theChosun Communist Party. The initial membership of 180,000, increased within two months to553,408 in 224 branches and 1,757 local unions. Between August 1945 and February 1948, ChunPyung organized over 3,000 strikes involving more than three quarters of a million workers.This dramatic upsurge of the leftist trade union movement by the Chun Pyung represented achallenge to the political and economic interests of the AMG and Korean capitalists. In response,the AMG and local capitalists employed two strategies; political restriction of Chun Pyungactivities and the promotion of right-wing trade unions. In 1946 the AMG restricted thepolitical activities of all unions under the rhetoric of cultivating „economic unionism‟ asexemplified by American unions. Also, in March 1947, anti-Chun Pyung groups, which includedright-wing politicians and capitalists, organized the Daehan Dogrib Chockseong NodongChongyeonmyeng (General Federation of Korean Trade Unions: GFKTU) to displace theChun Pyung. After the failure of the national strike, and under pressure from relentless attacksfrom the state and right-wing trade unionists,Chun Pyung was eventually banned by the statein 1947. Thereafter, the GFKTU became Korea‟s sole legally national trade union federation.This marked the beginning of labor movement incorporated to an authoritarian state in Korea.
  5. 5. The GFKTU‟s functions were limited to supporting the political and economic interests ofthe state and Korean capitalism. As a result of the subordination of the GFKTU to the stateand capital, the independent labor movement was fragmented and forced to operatethrough localized unions for groups such as miners, employees of the USA military forces andsome textile workers. Like other socio-political groups, trade unions were again incorporatedinto the rapid industrialization programs of the Park military government from the early 1960sonwards. 2 detail the extent of that short-lived renaissance.Table 2Employment andlabor disputestrend in Korea,1957-1960 YearEmployee(thousand :%)Unemployed(thousand :%)Disputes (No.)Participants (No.)19571958195919608,079(100)8,748(108)8,768(109)8,521(106)277(100)334(121)347(125)434(157)45 9,39441 10,03195 49,813227 64,335RAPID INDUSTRIALISATION OF KOREA: EARLY 1960s-EARLY 1980sRapid Industrialization and Korean Political Economy: early 1960s-early 1980sThe Park government seized power by military coup in May 1961 and soon its anti-democraticpolitical practices faced increasing resistance from opposition political groups and students. Inresponse, the government became both more repressive and authoritarian. In 1979, widespreadresistance produced an internal political crisis in the Park government, which collapsed with theassassination of Park Chunghee. In this context, a new military elite led by Chun Doohwan andRoh Taewoo gained political hegemony. However, given the highly authoritarian behavior ofsuccessive Korean military governments, economic growth was critical to cement their politicallegitimacy; thus rapid industrialization was a key objective, especially for the Park governmentfrom the 1960s.All possible means were used to incorporate various sectional interest groups such as thechaebol, workers and trade unions into the economic policies of the state. To reconstruct andmobilize an economic development mindset throughout Korea, the military governments
  6. 6. organized cultural and moral campaigns such as the Saemaul Undong (New VillageMovement: 1971) and the Social Clean-Up Movement (1980). They also suppressed opposition,imposed censorship and used „anti-red‟ propaganda to contain challenges to their authority,including from trade unions. The dominant economic strategy of the authoritariangovernments involved export-led industrialization (ELI), using foreign capital andinvestments and an abundance of low-skilled labor. To achieve this ELI strategy, four FiveYear Economic Development Plans (FYEDP: 1962-1966, 1967-1971, 1972-1976, 1977-1981)were implemented under central control of the Economic Planning Board during the Parkgovernment era. The first two FYEDPs were mainly devoted to building the infrastructure tofacilitate rapid industrialization, such as regional industrial estatesin Ulsan (1962), Kuro (1967)and Masan Export Free Region (1969) under the Korean Export Industrial Estate Act (1964)which aimed to efficiently utilize limited industrial resources. Relying on cheap and lowlyskilled labor, labor intensive light industries, such as textiles and footwear, were also developed.Building on these initial developments, the latter two FYEDPs aimed to transform the Koreanindustrial structure toward large scale heavy and chemical industries in the 1970s. During thefifth Five-Year Economic and Social Development Plan (1981-1985) of the Chun government,the Korean economy was restructured away from its high dependence on heavy and chemicalindustries towards more technological and capital-intensive industries. As a result of suchintensive industrialization, Korea‟s economy experienced average annual economic growth ratesof approximately 10 per cent between 1963 and 1979 and over 7 per cent between 1981 and1987.The economic develop mentalist approach of the authoritarian military governments was criticalfor the emergence of monopoly capitalism in the form of the chaebol. The chaebol was chosenby the state as the main private sector economic forces to achieve rapidindustrializationand, in the process, transform their previously small and medium sizedbusiness into large scale conglomerates by the 1970s. An integral part of the state driven ELIstrategy involved forcing workers in the chaebol to work for relatively low wages. Furthermore,unions were repressed and subordinated to the policy of rapid industrialization. Onlypolitically subordinated unions were able to maintain their positions; those who resisted wereforcefully expelled from Korean workplaces.From Competitive Capitalism to the Monopolistic Capitalism of the Chaebol: early 1960s-early 1980sDuring the period of rapid industrialization from the 1960s and 1970s, most of today‟s leadingchaebol cemented their economic position. As the chaebol was chosen as the main privateagencies for ELI policies, all available means were provided for their growth.
  7. 7. Therefore, the economic policies of the governments aided the development of themonopolistic capitalist development of the chaebol. As the main private agencies for rapidindustrialization, the chaebol businesses were adjusted or diversified in line with different stagesof state economic policies. For example, in the 1970s the main businesses of most leadingchaebol were restructured to enable them to convert to large scale heavy and chemical industriesunder the guidance of the government‟s economic policies. The sharp increase of a number ofthe twelve largest chaebol‟s subsidiaries in these industries from 31 in 1972 to 122 in 1981. Thiscontrasted with a minimal increase in the number of subsidiaries in light industries. Inmanufacturing, the share of total sales by the twelve large chaebol in the 1970s increased from14.2 per cent in 1972 to 31.5 per cent in 1981The growth strategies of the main chaebol were closely associated with, and had a criticalimpact on, their labor-management practices, and on the trade union movement. First, thetransformation of the chaebol‟s businesses to heavy and chemical industries in the 1970sbrought a change of its labor market characteristics. As a result of restructuring, heavyindustries became the major workplaces of the chaebol in Korea, resulting in employment levelsincreasing from 25,000 in 1972 to 154,000 in 1981 at the twelve largest chaebol. Twelve largestchaebol share of total employment increased from 8.1 per cent to 14.3 per cent of the entireworkforce in the same period.The government‟s policy of promoting industrial estates resulted in the regional concentrationof similar production systems, such as Ulsan for Hyundai, Masan and Changwon formachinery industries and Keojae Island for Daewoo Heavy Industries. Such regionalconcentration resulted in the development of large numbers of workers doing similar typesof work under similar working conditions in the same region. This combination of factorswas critical to the emergence of an independent trade union movement. It facilitated thedevelopment of large scale regionally based and chaebol-based trade unions, such as theHyundai Group Trade Union Association in Ulsan Industrial Estate and the Masan-Changwon Union Coalition in the Masan-Changwon Industrial Estate.The government‟s ELI strategy combined with the chaebol‟s growth strategy resulted in labormanagement strategies that focused on cost minimization achieved through highproductivity and low labor costs. As rapid industrialization progressed, the gap between theincrease rate of labor productivity and employee wages widened, contributing to the growth ofclass consciousness and solidarity among production workers. As part of this cost minimizationapproach to labor management, in the 1970s, militarist labor control strategy was evident in thechaebol. This consisted of a comprehensive hierarchy of subordination similar to a militarycommand structure. Within the chaebol workplaces, it was applied as a cultural form of laborcontrol, without reliance to formal regulations or policies to maximize production efficiencies.This cultural form of labor control involved military style morning meetings, short haircuts andthe wearing of uniforms. Under this militaristic management style, once an order was given by
  8. 8. foremen or managers, it was to be implemented without question, even if it involved a difficultor hazardous task. If workers did adhere to this militaristic workplace culture, they faced theprospect of losing their credibility within their community and at work, and were likely to facethe prospect of dismissal.Rapid Industrialization, Monopolistic Capitalism and the Trade Union Movement: early1960s-early 1980sAs rapid industrialization of Korea was underpinned by cheap, low-skilled labor, thepredominant objective of state industrial relations policies, and those of the chaebol, was tominimizelabor conflicts and to maximize the productivity of Korean workers. To achievethese outcomes, the state and employers adopted repressive forms of corporatist labor controlinvolving strict control of trade union activities. Those unions that did not submit were expelledfrom Korean workplaces. To ensure that workers and trade unions remained compliant, the Parkgovernment enacted various labor laws and a trade union act. The Trade Union Act, the LaborDispute Conciliation Law and the Labor Committee Law were re-amended in 1964 to restrictthe presence and political activities of multiple unionisms in the workplace, as well as toestablish the Labor Management Council, and to promote economic-oriented unionism. Toattract foreign direct investment, in 1970 the Temporary Act for the Trade Union and the StrikeAdjustment in the Workplace of the Foreign Invested Enterprise was enacted to ensure a strike-free environment in foreign-invested industrial estates. As industrialization progressed in the1970s, the Park government became increasingly repressive and intervened in workplaceindustrial relations as industrial conflict became transformed into social and political conflicts.The Special Act for National Security (SCNS) was one of the government‟s major institutionaldevices for laborrepression, with the public security agencies such as police and the Korean CIAbeing used to suppress industrial conflict.The sole national body of trade unions, the FKTUwas not exempt from this repressive corporatistcontrol of the government. In 1961, its organizational structure was restructured by thegovernment into 16 industrial federations comprising 2,359 unions and 336,974 members toexpel „non-cooperative‟ union leaders. Only those union officials, who the government deemedwere loyal to the regime, were permitted to remain. Given the subordinate role of the FKTU tothe state‟s economic and political agendas, the genuinely independent trade unions wereconstrained in their ability to fight for worker rights in the 1960s, with most unions existing insmall and medium sized workplaces, they were easily dissolved by a combination of employersand the state. Furthermore, with the introduction of SCNS in 1971 collective bargaining andindustrial relations action was severely limited and subjected to decisions by the state, greatlyweakening the power of trade unions.
  9. 9. Nonetheless, a genuine⎯albeit underground⎯labour movement emerged in the early 1970s. Itsprotests became militant and included incidences of suicide by self-immolation in the case ofChun Taeil in 1971. The number of strikes increased from 70 in 1969 to 101 in 1971. With themarginalization of the FKTU, especially from the mid-1970s, aggrieved workers organizedthemselves and staged spontaneous, large scale protests.A large independent and militant labor movement emerged in parallel with the development oflarge scale production systems, especially in the workplaces of the chaebol. For example, in1977, a strike at one of Hyundai‟s Middle East sites against low wages and militaristic laborcontrol by authoritarian supervisors involved over 3,000 workers.When authoritarian labor controls were removed by the recovery of democracy in the aftermathof the assassination of President Park in late 1979, an independent labor movement emerged. Theincidence of strikes rose from 96 in 1977 to 205 in 1980. However, like other pro-democracy,socio-political movements, the independent labor movement was suppressed by the Chungovernment in 1980. The FKTU was reorganized into 16 federations, 107 local branches wereclosed and the chairmen of 12 industrial federations were replaced. As a result, FKTUmembership declined from 1,092,149 members in 1979 to 948,134 in 1980. Trade unionactivities were restricted and confined to workplace matters by re-amendment of Trade UnionAct in 1981.THE TRANSFORMATION OF KOREAN INDUSTRIAL RELATIONS: 1980s-1990sTransition from an Authoritarian to a Democratic Political Economy: mid-1980s- 1990sFollowing the killing of two student activists by police, a nation-wide democracy movementerupted throughout Korea. The movement gained an agreement for the reinstitution ofdemocracy by the Chun government in June 1987. In the following months, an independenttrade union movement emergedthroughout Korea. Since then, Korea has been, to a greater orlesser degree, on a path of transition from an authoritarian to a more democratic industrialsociety. Owing to their autocratic heritage, however, the Roh (one of Chun‟s aides, 1988-1992)and the recent Kim government (1993-1997) failed to meet demands for the adoption ofdemocratic principles, and their authority has often been challenged by various sectional interestgroups including trade unions.Since the mid-1980s, the Korean economy has also been undergoing changes. A major forcefor the changes was its loss of cost competitiveness in its ELI strategy, which was largely
  10. 10. dependent upon a policy of maintaining low laborcost; it was undermined by the emergence ofindependent trade unionism and their attempts to improve the wages and working conditions ofKorean workers. The cost competitiveness of the Korean economy was also challenged by latedeveloping countries such as ASEAN economies and China. In response, the state and chaebolhave attempted to restructure industry towards more technological and capital intensiveindustries manufacturing high value added products such as semiconductors, motorvehicles and micro-electronics. Moreover, the state‟s highly interventionist approach to theeconomy encouraged a less regulated market economy and reduced the monopoly power of thechaebol in response to public pressure. These structural changes to the national economyunderpinned the Sixth Five Year Economic and Social Development Plan (1987-1991) andSeventh Five Year New Economic Plan (1993-1997).Crisis of Monopolistic Capitalism, the Chaebol and Transition: mid-1980s-1990sThe emergence of monopolistic capitalism in Korea during the period of rapid industrializationenabled the chaebol to become the key force in the Korean national economy. Based on theireconomic power, their supply of political funding and considerable sway over the mass media,they have become the de facto ruling class in Korea. Since the mid-1980s, however, changes inthe political and economic environments, including industrial relations, have resulted in revisedgrowth strategies among the chaebol. First, the anti-democratic aspects of monopolisticcapitalism have been the object of sustained public criticism, resulting in a shift from thetraditionally reciprocal broad-based economic relations between the state and the chaebol, to oneof more selective ties in relation to a narrow range of economic interests. For example, onlythose industries such as high-technological oriented industries manufacturing value addedproducts in the private sector were supported by the government.Second, the development of an independent trade union movement after the mid-1980sbecame a central force in criticizing the anti-democratic elements of the chaebol‟sindustrial relations policies, including their cost minimization strategy. Relying on strongcommunity support for improved rights at the workplace, unions were able to recover theirbargaining power in negotiations with employers and the state. Table 7 demonstrates the sharpincrease in wages since the mid-1980s that has undermined the low labor cost practices of thechaebol. The protected and monopolistic market position of the chaebol in Korea has also beenexposed to competition as the Korean market has been opened to multi-nationals.
  11. 11. Changes in monthly salary of manufacturing employees, 1981-1996Unit: won,% Period1982-1984 1985-1987 1988-1990 1991-1993 1994-1996Salary(Index)224,940(100.0)297,611(132.2)491,816(218.6)791,418(351.7)1,135,853(504.8)While restructuring of their businesses towards high-tech oriented, in response toincreasing labor costs and the influence of trade unions, the chaebol put considerableefforts into replacing labor intensive work processes involving large scale productionsystems with automated production systems in order to reduce their demand for labor and toweaken the role of trade union involvement.The chaebol have also altered their militaristic approach to labor management, with arange of more „paternalistic‟ management practices including the introduction of intensivewelfare facilities and seniority-based promotion systems for production workers evident atchaebol workplaces such as Samsung, Hyundai, LG and Daewoo. In addition, since the early1990s there has been a noticeable change towards employing foreign workers for labor intensiveactivities. While the number of foreign workers employed by the chaebol in their Koreanworkplaces is comparatively low, it is likely to expand considerably in the future.The Independent Trade Union Movement and the Transformation of Korean IndustrialRelations: mid-1980s-1990sAs the large scale of chaebol workplaces grew in the 1970s and early 1980s, the classconsciousness of production workers was actively promoted by underground unionists whooperated in alliance with other democratic activists, such as students in the early 1980s. Theyorganized leading independent union associations, such as the Korean Labor WelfareAssociation in 1984, with the support of Christian related groups, the Seoul Labor MovementAlliance established in 1984 by a dismissed unionist, and the Inchon Workers‟ Alliance setup by student activist groups in 1986. These groups organized several important strikes atchaebol workplaces, which provided the basis for trade union activism in 1987.Independent unionists became the target of the government and employers because of theirsignificant role in the movement opposing the authoritarian Korean state, the monopolisticpractices of the chaebol and the political subordination of the FKTU. However, following
  12. 12. nationwide demands for democracy in June 1987, an independent union movement was quicklyestablished in workplaces throughout Korea.In response, employers initially resorted to unlawful tactics to disrupt the independenttrade union movement. For example, at the Hyundai Mipo Dockyard in 1987, officialdocuments for the registration of its union were forcibly seized by management, despite thepresence of government officials. A similar response was evident in other chaebol workplacessuch as Samsung and Daewoo as employers sought to prevent the official registration ofindependent unions so that the independent unions remained illegal organizations. The chaebolemployers also registered their own company-backed unions in order to create internal splitamong union members for legal hegemony of their union body.However, since the early 1990s, tactics of this sort have declined in favor of a non-violent,more consensual approach to labor management. On the one hand, the previous laborintensive production systems have become more automated to eliminate the need for largenumbers of workers. The concentration of factory production in large industrial estates becamemore decentralized through the establishment of new industrial regions or transplantingproduction overseas. At the same time, the chaebol put its efforts into establishing economicunionismmore interested in wage conditions and employment relations rather than socio-politicaldevelopmentthrough the adoption of paternalistic employment policies such as introduction ofwelfare facilities, involving housing support and education, and cultural programs that sought toinculcate workers into viewing themselves as part of the chaebol „family‟. At the national level,with the support of the government, the Korean Employers‟ Federation (KEF) introduceda tripartite wage conciliation system, the “Social Accord”, organized by the government,KEF and FKTU to regulate wage increases and labor.Despite the rediscovery of political democracy in Korea, the state still suppressed independentunions using the various legal means at its disposal in association with employers. After theSeoul Olympics in 1988, a large number of independent trade unionists were arrested by thegovernment, especially those in Hyundai and Daewoo because of their pivotal role in thenational trade union movement. This aggressive approach was later moderated by the Kimgovernment by incorporating the radical and independent union movement into itsindustrial relations framework and by the government‟s official recognition onindependent trade unions, although the Kim government‟s industrial relations policies did notentirely satisfy the demands of trade unions.In comparison with the government-controlled and subordinated unionism of the FKTU,independent trade unions that emerged after the mid-1980s advocated more „liberal‟ and„democratic‟ principles, which conflicted with the authoritarian state and the monopolycapitalism of the chaebol. This independent unionism neither fits with the Western categories of
  13. 13. „left‟, nor does it resemble the ideological beliefs of „communist‟ unionism of the 1920s and1940s mentioned earlier. However, its main ideological position consists of anti-managementmore precisely anti- chaebolclass consciousness. Further, the independent tradeunionists were unequivocal in advocating social democratic rights such as freedom of speech, afair and equitable distribution of the means of production, distribution and exchange, andequality for individuals in society. To achieve this they sought to remove authoritarian elementsof the socio-political system and limit the monopolistic capitalism of the chaebol by enhancingtheir collective bargaining power at both the workplace and national levels.When demands by independent unions were made in chaebol workplaces they directly clashedwith the political and economic interests of the chaebol owners. In response, the chaebol usedaggressive and disruptive tactics to break up the trade unions in their workplaces rather thancompromise with them: their differences were fundamental. The immediate and disruptiveresponses of the chaebol, in turn, directly led to militant resistance from the independent tradeunions. As the authoritarian state relied for its political existence on economic developmentdriven by the business activities of the chaebol, the state also repressed the independent tradeunions and sought to frustrate their attempts to break up the symbiotic relationship between thechaebol and the state.In spite of the massive eruption of trade unionism after mid-1987, the movement remainedfragmented until the late 1980s. This arose because the government-controlled union federation,the FKTU, was incapable of absorbing the demands of newly independent trade unions. The jointattacks by the state and employers against independent trade unions further aggravated the splitbetween the FKTU and independent trade unions. The state adopted a divide and rule approach,providing prestigious concessions such as legal recognition on bargaining and financial supportsto FKTU unions while the continuing to repress independent trade unions. This, in part, causedthese independent unions to confine their struggle to a workplace level, weakening theircollective bargaining power at the national level.However, in order to overcome such limitations, independent trade unions have developedtheir own national organization to resist the authoritarian responses of both the state andemployers and in order to respond to the continuing political subordination of the FKTUfrom the early 1990s. Therefore, various national federations of the chaebol-based unionassociations emerged, for instance, Hyundai Group Trade Union Association, the publicsector union association, the National Subway Train Association, regional trade unionassociation, such as the Changwon-Masan Region Unions Association, and occupationalunion association such as the National Teacher‟s Union. These national federations haverepresented a distinctive feature of the Korean trade union movement since mid-1987.
  14. 14. The chaebol-based unions have organized themselves to parallel the organization of the chaebolin order to enhance their collective power and maximize workforce solidarity and in an attemptto counter the economic power of the chaebol. For example, the Kia and Hyundai Group tradeunion associations were based on subsidiary companies of Kia and Hyundai. Regional unionassociations were based on the regional concentration of similar production factories that hadoccurred as a result of the state‟s industrial estate policies and the production managementstrategies of the chaebol. For example the Masan and Changwon Unions‟ Association wasfurther significant development within the independent union movement. Moreover, of specialimportance has been the development of Chunkuk Kyojikwon Nodongjohab or Chunkyojo (TheNational Teachers‟ Union, NTU). This national federation was organized in 1989, inter alia, tochallenge the authoritarian education system.To overcome the fragmented nature of the trade union movement at national level, independenttrade unions have organized their own national peak body, the Minju NodongjohabChongyeonmaeng or Minju Nochong (Korean Confederation of Trade Unions, KCTU) in1995. Although the Minju Nochong has suffered from internal struggles and factionalism, it hasbecome the central countervailing power to the state, employers and the FKTU, especiallythrough its initiatives during the General Strike of 1996 and 1997. Its membership increasedfrom 861 unions and 391,000 members in December 1995 to 896 unions and 490,000 membersin December 1996.The General Strike between December 1996 and March 1997 demonstrated the central role ofthe independent trade unions in response to attempts by the state and employers to weaken orlimit the collective bargaining power of trade unions. In December 1996, the Kim governmentamended the Trade Union Act. The Act itself permitted trade unions to engage in politics,although the Electoral Law forbids participation by bodies other than registered political parties.Workplace multi-unionism would not be allowed until the year 2003 and alternative peak tradeunion bodies would not be permitted until 2000. This implied that the newly emergedindependent unions were not legally recognized until then and other independent unionists at theworkplace were limited to organize their own union until then if the company union was legallyregistered and thus prevented their activities.The effect of the amendments fell well short of the demands of the independent trade unionmovement, which called for a massive General Strike by trade unions, the first national politicalstrike since the general strike of Chun Pyung in 1946. The strike was ignited by the MinjuNochong in 26 December 1996 on the day that the Kim government passed the amendment ofthe new Trade Union Act. Immediately, 96 unions of the Minju Nochong involving 145,000workers went on the strike and organized street demonstrations. This increased to 146 unions and200,000 workers over the next three days, with industrial strikes becoming widespreadthroughout Korea. In the course of strike, on 10 January 1997 a unionist of Hyundai Motor
  15. 15. Company Union suicide by self-immolation. The strike resulted in international attention fromthe International LaborOrganization and International Metal Federation, whose executivesvisited the place leaders of the Minju Nochong who were on hunger-strike in support of theGeneral strike.As a result of such sustained strike action, the government revised its new Trade Union Act inMarch 1997 to include union‟s demands such as multi-unionism at the national level (legalrecognition of Minju Nochong). Despite its re-amendment, it still contained some unfavorablesections for trade unions. Multi-unionism at the workplace was still postponed, the authority ofemployers to reduce workforce members and working hours (numerical flexibility) remainedthough some limitations to its impact were conceded, and teachers‟ rights were still restricted.In the course of the strike, the most important gains of the independent trade unions were that theMinju Nochong emerged as the significant winner over other parties, such as the FKTU andgovernment. Not only in terms of organizational expansion, but also by gaining significantpublic recognition as a more legitimate representative of organizedlabor as a peak body than theFKTU. Therefore, its organizational strength was considerably enhanced through its successfulorganization of the national strike. Among various factors that contributed to their victory, themost important factor was its organizational base. Affiliates of the Minju Nochong are basedin key public facilities such as subway transportation and telecommunications. Within theprivate sector the Minju Nochong has affiliates in shipbuilding and the automobile industry andthe chaebol -based unions, all of whom were key agents at the forefront of General Strike. Oncethese groups went on strike collectively, the strike became national, causing mass disruption thatdirectly undermined the business activities of the chaebol and the chaebol-dependent nationaleconomy.CONCLUSION –Government Ideologies and its impact on South Korea Industrial RelationsSouth Koreas history is marked by alternating periods of democratic and autocratic rule.Civiliangovernments are conventionally numbered from the First Republic of Syngman Rhee to thecontemporary sixth republic.1. Sygnam Rhee – On August 15, 1948, the Republic of South Korea was formally established,with Syngman Rhee as the first President. the 1953 legislation regarding trade unions and labordisputes formally established industrial relations in KoreaThe rights granted to trade unionshowever was revoked during the 1960s period and thereafter. During the 1945-1960 period,
  16. 16. workplace industrial relations in the major conglomerates known as the chaebol (Samsung,Lucky Gold star, Hyundai, and Daewoo were thelargest) was closely modeled on the Japanesesystem, and has been described as “paternalistic” or “authoritarian”. But the methods by whichdifferent regimes subordinated labor varied by regime.These methods were clearly introducedto deal with industrial conflict that might threaten the prosperity of the chaebol and thuseconomic development generally. Apart from direct repression through the use of force, thestate alsomandated labor-management councils in every enterprise, introduced tripartitecommissions atprovincial (district) levels to resolve disputes (these commissions grew out of the1953 legislation),and promulgated laws that restricted direct action by labor through mandatedcooling-off periodsbefore 1980.By late 1950s, President Rhee became more and more autocratic. His administration arrestedmembers of the opposing party and executed the leader after accusing him of being a NorthKorean spy. On March 15, 1960, protests by students and citizens against the irregularities of theelection burst out in the city of Masan. Initially these protests were quelled with force by localpolice, but when the body of a student was found floating in the harbor of Masan, the wholenation was enraged and protests spread nationwide. On April 19, students from variousuniversities and schools rallied and marched in protest in the Seoul streets, in what would becalled the April Revolution. The government declared martial law, called in the army, andsuppressed the crowds with open fire. Subsequent protests throughout the country shook thegovernment, and after an escalated protest with university professors taking to the streets onApril 25, Rhee handed in his formal resignation on April 26.2) Major General Park Chung-hee– After the resignation of President Rhee, an interimgovernment came into existence only to face a military coup on May 16, 1961. The military rulehad to show robust growth so as to cement its position in the political arena. Thus, with respectto industrial relations, government became more authoritarian and chaebol-supportive. This wasthe time when Government propelled EXPORT LED INDUSTRIALISATION (ELI) growthstrategy with the help of foreign funds and investments and cheap labor. To implement thisstrategy, the government came up with four five-year plans. These plans emphasized on buildingnecessary infrastructure for the industrialization.The authoritarian government focused on the Chaebols to fulfill its industrialization dream. As aresult of this, the workers were forced to work for chaebols on relatively low wages. Thegovernment policies were repressive, with little reprieve for the working class. The trade unionact, The Trade Union Act, the Labor Dispute Conciliation Law and the Labor Committee Lawwere re-amended in 1964 to restrict the presence and political activities of multipleunionism in the workplace, as well as to establish the Labor Management Council, and topromote economic-oriented unionism.
  17. 17. The sole national body of trade unions, the FKTU was also not exempted from the repressivecontrol of government. Only those leaders whom government thought loyal were allowed toremain. The small independent unions were constrained in their fight for collective bargaining.By 1971, the collective bargaining and industrial actions were subjected to decisions by the statewhich further weakened the labor unions.Following the assassination of General Park in 1979, an independent labor movement emerged.The incidences of strikes increased as a result of repressive policies of the government. But thismovement was soon curbed by General Chun Doo-Hwan who came to power in 1981.3) General Chun Doo-Hwan - The ascendancy of a new martial law leader Gen. Chun-dooHwan in 1981 coincidedwith a change in economic development strategy towards higher value-added exportsand consequently there were more changes in industrial relations legislation. Inearly 1981legal changes mandated the formation of Japanese-style enterprise unions, althoughthegovernment ensured its system of political control by forcing all enterprise unions to be partof theFKTU (the government-mandated union confederation). Further given the involvement ofbothstudents and church organizations, the government prohibited the involvement of "thirdparties" inunions. While these actions were clearly politically motivated, they also helped thechaebol containor avoid industrial conflict, and continue their "authoritarian" management styles.Although therewere some efforts to introduce some labor protection laws and regulate vocationaland skillstraining, the primary focus was political control of IR activity, i.e., stability. Thus, theKoreanindustrial relations system during the period of martial law continued to have disputepreventionand dispute avoidance as the primary focus of its policies, as part of the overall goal ofmaintainingstability in industrial relations for economic development (e.g., in particular, thegovernment‟sefforts to control wage costs), and political control.4) Roh Tae-Woo - With democratization in 1987, industrial relations legislation and practice haschangedsubstantially, with the Korean IR system entering a transition period. Withliberalization of labor law, the trade union movement mushroomed, with a sharp increaseinunion density (18.6% in 1990) and strikes during the 1987-1989 periods.The hegemony of theFKTU was finally broken as new independent unions formed and some ofthem created theKCTU in opposition to the FKTU. The scope of bargaining expandedsubstantially, and tradeunions, confronted with a management unused to collective bargaining,have been able to usetheir economic power to win substantial nominal wage increases (71 per centduring 1988-1990).Bargaining power thus appearedto be with the unions in the years immediately followingdemocratization.Given the erosion of their competitive position, Korean chaebol have reacted to themilitant uniondemands by following a mixture of suppressive policiesand progressive HR practices, althoughthese practices were introduced by only some of the chaebol(e.g., LG promoting labor-
  18. 18. management collaboration.). On the other hand, in the early 1990s,employers were calling forthe need to cut labor, given the increases in costs. The state initiallytried to inject some wagemoderation through the articulation of wage norms (the norm was 10% in1990) with littlesuccess, as different chaebol adopted different strategies of dealing with theunions. The unionstoo have been divided during this period. One the one hand, some unions,notably those affiliatedwith the FKTU, advocated moderation given the needs of Koreancompetitiveness, but theindependent unions that started forming around 1991 and finally grew intothe KCTU in 1995(which was illegal and continued to be so until 1999) were not in agreementwith the policies ofthe FKTU.5) Kim Young-Sam - The government of Kim Young-Sam responded to the growing unionmilitancy in 1996with a predawn clandestine reform of labor legislation, which on the one handallowed unionparticipation in politics and allowed multiple unions in the workplace by 2002,while on the otherhand avoided recognition of other peak federations until 2000, and mostimportantly, increased theAuthority of employers to lay off employees. These changes resultedin widespreadlabor agitation and strikes. In general, the nine years following democratization canbecharacterized as a period of experimentation and diversification in industrial relations practiceandregulation.The Asian economic crisis beginning in 1997 hastened the process of industrialrelationsrestructuring. The IMF bailout of the South Korean economy, coupled with theaccession of Kim Dae-Jung (viewed as more friendly to the labor movement than hispredecessor), paved the way forfar-reaching changes in industrial relations in 1998. For thefirst time, labor was given participationin national decisions through the creation of the Tripartitecommission (an 11 member commissionwith two representatives from labor [KCTU and FKTU],two representatives from management, theministers of finance and labor, and representativesfrom four political parties). The Commissionissued a social pact for dealing with the economiccrisis, with several key decisions on industrialrelations. These included (apart from recognizingthe KCTU) the establishment of anunemployment insurance fund ($.3 billion) coupled withexpansion in the amount and periods ofunemployment benefits as part of a social safety netpackage, collective bargaining rights for thepublic sector from 1999, the freedom of labor unionsto be active politically, a revision of laborlaws to permit layoffs, the ability to use temporarylabor for periods up to one year, advancenotification of intended layoffs, and various obligationsof the employer in the case of layoffs. Inaddition, the agreement introduced a change in the long-standing practice of employers paying thewages of full time union leaders. It was the need fornumerical flexibilitythat resulted in these provisions. The Labormovement‟s willingness toacceptlayoffs could have happened only at this juncture, when the pressure of the economiccrisis wasgreat, and with the trust that labor has in President Kim Dae-Jung, although it is notclear that allworkers (within the KCTU) supported the agreement.
  19. 19. The effects of the social pact are still being played out. On the one hand, the agreementhas metseveral of labor‟s long-standing demands, such as recognition of the KCTU as anationalfederation, collective bargaining rights for teachers, and most important, a voice innational decision making through the peak level tripartite commission. However, the economiccrisis andThe IMF bailout, coupled with the law permitting layoffs, has weakened workplace unionsconsiderably. This is illustrated by the fact that job security was the primary bargainingissue in 1998 in Korea, while it had been taken for granted in the past.The KCTU, at best a skeptical participant in the tripartite commission, has thereaftershownunwillingness to cooperate in the tripartite commission, and efforts of the various chaeboltorestructure and layoff have been met by a wave of strikes. Although a strike at Hyundai inresponseto layoffs in 1998 was settled through government intervention, local unions continue toresort tothe strike in the face of restructuring efforts by corporations. One consequence is thatseveralcompanies have since then attempted to guarantee some degree of job security (e.g.,DaewooPrecision, Inchon Steel, and Korea Telecommunication). Companies and unions are alsomakingattempts to increase labor-management cooperation. For example, the Hanil Lease unionused itsstrike fund of W 100 million ($ 82000 at current exchange rates) to protect the companyfrom beingbankrupted in April 1998. However, it is difficult to determine whether theseexamples are part ofa sustainable trend.Since the Korean economy has begun its recovery from the financial crisis in 1999, the scholarssuggest that the tripartite commission has not livedup to its promise of creating a social dialogueat the national level. By January 1999, the agreementbetween the government, employers andunions via the tripartite commission has broken down,primarily over the job security andemployment flexibility issues. The workers of the KCTU struckwork in a campaign to limitemployment cuts and replace them with work sharing. By April 24,2000 automobile workers ofDaewoo were on strike protesting the restructuring efforts andpotential closure of Daewoosautomotive business, to which the government responded with arrestsof striking workers andunion leaders. Thus, there is considerable turmoil, and the new IR systemforged in the midst ofthe economic crisis would appear to be another step in experimentation inSouth Koreanindustrial relations in its long run search for increased flexibility, both functional andnumerical.In summary, Korean industrial relations continues to be in a period of transition, with a lotof experimentation with institutions, and a high degree of diversity in practices. Thetransitionto democracy in Korea coincided with, and to some extent hastened the need for,increasedflexibility in industrial relations, as Korean competitiveness in several sectors eroded,particularlyin the lower cost sectors of textiles, shoes, and electronics where there has been amigration ofKorean firms to the rest of Asia. In other sectors, employers have attempted torestructure theirbusinesses and industrial relations, and the financial crisis has hastenedthe
  20. 20. need for such restructuring. The IMF bailout and the accession of Kim Dae Jung has facilitatedtosome degree employers‟ push for increased flexibility. Despite a peak level agreementthatpermitted layoffs, however, the efforts of employers to enhance workplace level functionalandnumerical flexibility has been met with resistance by a labor movement that is stronger andmorevocal. Further, as a consequence of the 1997 legislation permitting them, the number ofindustrialunions are growing, (between 1998 and 2000, seven industrial unions have formed,while others arein the process of forming), although industrial level bargaining has been resistedby employers.Clearly however, numerical flexibility has become a key aim for Koreanemployers, while jobsecurity has become a key goal of Korean unions, during the decade of the1990s.
  21. 21. Bibliography –1. http://vbn.aau.dk/files/13994106/DIIPER_wp_5.pdf2. SaroshKuruvilla& C.L. Erickson, Change and transformation in Asian Industrial Relations,Published in Industrial Relations, vol. 41, no. 2 (April), 171-228, 20023. Choi Sukhwan, Employee representation system in South Korea4. Harvie, C and Lee, HH, Export Led Industrialisation and Growth – Korea‟s Economic Miracle1962-89, Working Paper 03-01, Department of Economics, University of Wollongong, 2003.5. Development Lessons from Asia: Role of Government in South Korea and Taiwan, YungChul Park, Vol. 80 No. 2, Page – 118 -133

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