South Korea - After the financial crisis, the working class under attack

Mar/Apr 1998

Just over a year ago, in the winter 1996-97, the South Korean working class came under the spotlight of the British media for staging its first general strike since 1948. The main demands were the repeal of a new law, which paved the way for increased labour flexibility and mass redundancies in large industries, and the full legalisation of the Korean Confederation of Trade Unions (KCTU) which had initiated the protest.

Eventually, the strike was called off by the KCTU leadership after 24 days amidst some confusion, on the basis of a vague pledge made by the government to review its position. Two months later, however, the government conceded some limited ground by deferring the legislation on layoffs until 1999 and watering down other aspects of the disputed law. At the same time the KCTU won official recognition as a legitimate trade union body.

Almost a year later, on February 14th, the Korean parliament passed new legislation on layoffs and labour flexibility, which, if implemented, will effectively cancel the gains made in this respect by last year's general strike. The conditions, however, have changed drastically. While last year the Korean economy showed signs of sluggishness in the face of fiercer competition in a stagnating world market, today the country's economy is in complete shambles as a result of the recent financial crisis.

Indeed, while the western media hail the fact that, despite this financial crisis, the stock markets of the rich industrialised countries have managed to achieve a record hike in 1997, in south east Asia the social consequences of the financial crisis are still unfolding, with increasingly catastrophic results.

The region's poorest countries like Indonesia, Thailand and the Philippines, have already seen a rising tide of hunger riots and ethnic clashes fuelled by despair. Large-scale factory closures, brutal food price increases coupled with the ending of state food subsidies and the sudden collapse of most public utilities and services for lack of funds, are pushing these countries decades into the past. The mirage of their alleged "industrial boom" is melting away revealing what was always beneath - impoverished Third World societies.

By contrast, in richer South Korea, the world's 11th industrial economy up to last year, the consequences of the crisis have been slower to develop. But they are nonetheless dramatic. Petrol, transport and food price increases, coupled with widespread wage cuts, have already reduced the standard of living of the working class by an estimated 30% compared to the fourth quarter of 1997. But this is for those workers who have been fortunate enough to retain their jobs as, according to trade union estimates, as many as one million jobs may have already disappeared in the five months since last September, out of a total workforce of 21 million.

So far, however, despite the spectacular bankruptcies of eight of the country's 30 largest conglomerates (or "chaebols" as they are called in Korea), layoffs and closures have mostly affected smaller companies. The 3.5 million or so workers employed by the large industrial chaebols, which are also the core of Korea's export industries, have been relatively protected, partly because the existing legislation provided them with some protection and partly because of the fears of the capitalists and politicians that massive redundancies might trigger a backlash similar to last year's strike. Besides, a presidential election was planned for December 18th and certainly no political party was willing to take the risk of a confrontation in the run-up to the election.

So the task of implementing the austerity measures demanded by the chaebols to make the industrial working class foot the bill for the crisis, was postponed until after the election and left to its victor, the new Korean president Kim Dae Jung.

Kim Dae Jung, the "man of the White House"

Six or even three months before the election, hardly anyone would have considered Kim Dae Jung as a possible victor, if only because for the past fifty years, no opposition party has ever won a presidential election. So, despite the series of corruption scandals which had rocked the regime, the ruling Grand National Party was expected to win the election once again. However, the financial crisis threw a spanner in the works. The anger it generated among the electorate against the blatant and corrupt profiteering of the chaebol capitalists and their political representatives in the main parties was the main factor which catapulted Kim Dae Jung to the presidency.

Kim Dae Jung occupies a particular place on the Korean political scene, as an unswerving opponent to every Korean dictator since the early 1960s. His record as a victim of the repression and dirty tricks of the KCIA, the Korean secret police, is unparalleled among mainstream politicians. In addition to being tortured and jailed for six years, he survived an attempted murder by the KCIA in 1971, before being abducted two years later from Japan, where he lived in exile, and eventually sentenced to death for treason by a military court in 1979. The USA's intervention saved his life and he spent the following six years in exile in the USA, before resuming his political career in Korea in 1985, as a maverick opposition figure who was heavily defeated in the two attempts he made for the presidency in 1987 and 1992.

Kim Dae Jung never claimed to be a radical, nor even a reformer. And he certainly proved it in the run-up to the election, without any possible ambiguity, by concluding an alliance with the United Liberal Party, a right-wing party advocating the US liberal model for Korea. Ironically, the ULP's leader, Kim Jong Pil, was none other than the former head of the KCIA in the early 1970s, that is at the time when this respectable organisation was trying to assassinate Kim Dae Jung! But this petty matter will not stop Kim Jong Pil from being appointed prime minister by Kim Dae Jung later this month.

Nevertheless, Kim Dae Jung's impressive record in opposition, at least compared to the other mainstream politicians, made him a popular figure whose hands were clean of all the corrupt wheelings and dealings revealed by the large-scale bankruptcies triggered by the financial crisis. And Kim Dae Jung certainly strove to make the best of these unexpected circumstances.

His election campaign was dominated by repeated pledges to fight corruption relentlessly in government and in business, to curb the greed and power of the chaebols and to ensure that the chaebols, not working people, would be made to pay for the financial crisis. Thus in November, when the giant Samsung chaebol announced plans to cut its workforce by 30%, Kim Dae Jung made sure to be seen delivering keynote speeches at protest rallies organised by the trade unions. Subsequently, when the issue of the International Monetary Fund's bailing out of Korea came to the fore, Kim Dae Jung adopted a very firm line, pledging that he would never bow to the diktats of the IMF nor make any concession which might weaken the Korean economy's protection against foreign predator capital or undermine the standard of living of the Korean population.

This demagogy worked so well that the KCTU itself was split right down the middle between those in favour of supporting Kim Dae Jung in the election and those who backed the KCTU's own president who was standing as an independent candidate. In fact, even foreign business experts fell for Kim's rhetoric, judging by the dismay and alarm of western financial papers after his victory was declared on December 18th.

Soon, however, Kim Dae Jung proceeded to reassure business and, within days of his election, following a brief statement explaining how "appalled" he had been when he had "discovered the catastrophic state of Korea's finance", he declared his determination to carry out the liberalisation, business restructuring and the introduction of labour flexibility demanded by the IMF in exchange for its bail-out package. It was the turn of Kim Dae Jung's supporters to be dismayed. And they were even more dismayed when, on December 22nd, Kim Dae Jung announced his decision to pardon two former dictators serving life imprisonment - Chun Doo Hwan, the butcher of the 2000 demonstrators killed during the 1980 Kwangju uprising, and his successor Roh Tae Woo - without bothering to do or even say anything about the fate of a number of more obscure political prisoners, who were jailed because of their support for Kim Dae Jung!

In any case, by the beginning of January, there was no longer any possible doubt as to the agenda of the new president. And the fact that many of the key figures in the incoming government happen to have held responsible positions in various American agencies in the past is not mere coincidence. As many commentators are now saying in Korea, Kim Dae Jung turns out to be, and was probably always, the "man of the White House" in the Blue House, as the presidential palace in Seoul is known.

The "grand compromise"

The new president wasted no time to prepare the ground for a wholesale attack against the working class of the large industries. The Tripartite Commission involving representatives of the bosses, the state and the unions, which had been set up in early December with few results so far, was revived, with the objective of sorting out the country's economic collapse by implementing the measures recommended by the IMF. Both the FKTU, the old state-sponsored union confederation inherited from the days of the dictatorship, and the KCTU decided to take part in the discussions.

Out of this commission came, on February 6th, the so-called "grand compromise" which was agreed by all participants, including the KCTU delegates. This was indeed a compromise, but one practically entirely at the expense of the working class. In Kim Dae Jung's book, the word "compromise" did not apply to the Korean capitalist class.

In short, this agreement ended the need for companies to seek court and trade union approval in order to make workers redundant for economic reasons, provided the workforce is given a sixty-day notice. The right of employers to impose redundancies was extended to cases where a company merged with or was bought by another, even when there were commercial difficulties involved. Restrictions on the use of agency workers and other forms of casual labour were lifted for certain industries and skills (although this seemed to legalise widespread existing practices since the government's own figures show that, in the course of 1997, over 220,000 workers were hired by companies from illegal temping agencies).

In addition, the agreement included measures which were presented as "concessions" to workers. Thus companies were required to discuss the implementation of redundancy plans with the unions - but of course, the unions were not given a say in the decision itself (let alone the workforce): they were only allowed to help the bosses to iron out possible difficulties! Then there was a vague provision pledging more funds to extend unemployment benefit to a larger section of workers - the current system, set up for the first time in 1995, only covers a third of all waged workers and only provided they have worked continuously for long enough. But the agreement did not plan to include short-term and casual workers, despite the fact that they already made up 45% of waged workers before the financial crisis.

Finally some concessions were made on the long-standing issue of union rights for teachers: teachers would be allowed to join trade unions (which they have done for years, despite the fact that it was illegal) which would be given bargaining rights from July 1999. But teachers would still not have the right to strike and other civil servants would have to be content with only a vague "consultative body". Finally, trade unions would be allowed to stand candidates in political elections, beginning with the local election planned for June this year - there again this was rather legalising a de facto situation as shown by the KCTU president's candidacy in the presidential election.

In other words, companies were given a blank cheque to carry out mass redundancies and extend labour flexibility while the union machineries were granted a slightly higher status in terms of recognition both by companies and by the state. But for workers themselves there was no "concession" worth talking about.

But adding insult to injury, when the agreement was passed by the Korean parliament, on February 14th, in the shape of a set of 18 new labour laws, it was heavily amended. Some of the so- called "concessions" were scrapped - like trade union rights for teachers or the right for unions to stand candidates in political elections - while attacks against workers were aggravated - all restrictions on the use of temporary workers were lifted, for instance.

Rebellion in the KCTU

Not everyone in the KCTU had been in agreement with the decision of the leadership to participate in the Tripartite Commission. A number of unions and regional bodies had criticised this decision on two grounds: firstly, because they believed the KCTU should not give the impression that it was prepared to condone in any way the mass layoffs planned by the chaebols; and secondly, because the Commission's agenda did not include any discussion on the responsibilities for the financial crisis, nor on the dismantling of the chaebols - the KCTU's main demand in response to the crisis. Many of the critics also draw a link between the leadership's eagerness to participate in what they saw as a talking shop designed to con the trade unions into condoning a wholesale attack against the working class, and the confusion the same leadership had created by calling off the January 1997 general strike, on the basis of a vague pledge to reopen discussions made by the regime.

Predictably the publication of the "grand compromise", triggered a storm of protest within the KCTU, and not just among those who had been initially opposed to participating in the Commission. That very same day, the KCTU unions organising the 68,000 Hyundai in Ulsan - a stronghold of the militant tradition of the KCTU - released a statement condemning the agreement. Three days later, on February 9th, a representatives conference of the KCTU rejected the agreement by a 3 to 1 majority. Following this vote, the union leadership resigned and a temporary emergency executive committee was elected to replace it, in which the traditionally more militant metal industries unions were heavily represented. The emergency executive committee was then mandated to demand a re-negotiation of the agreement on the basis of opposition to layoffs, to refuse any further participation in the Tripartite Commission should this re- negotiation be refused and to organise a general strike starting on February 13th if the government refused to cancel the passing of the new labour laws in parliament.

This mandate to call a general strike from February 13th did not come out of the blue. The idea had been at the top of the KCTU's agenda since the beginning of January and during that month a number of local unions had already staged strikes in some of the chaebols over various issues related to those discussed in the Tripartite Commission.

Kim Dae Jung's reaction was immediate. It was a strident warning that all the rigour of the law would be used against the unions and the workers who would participate in what was already described, before any court decision had been made to that effect, as an "illegal" strike. Everyone knows in Korea that these are not empty threats. During last year's general strike, many rank-and-file activists experienced the heavy-handed tactics of the police and courts, often ending up in prison as a result. Eventually, the obvious failure of this tactic to break the strike led the government to soften its stance, but not before the general strike had entered its third week. Given the stakes involved this time, which are much higher for the Korean capitalists than they were a year ago, this threat had to be taken seriously.

Was it the fear of risking a head-on confrontation for which they felt that the KCTU was ill-prepared due to its current internal divisions, or some other reason, which prompted the emergency executive committee to cancel the planned general strike on February 12th? We do not know. In any case, this was what it did, with a terse statement saying that this decision had been made "out of consideration of public fear that the move might exacerbate the nation's economic crisis". And the statement went on saying that the KCTU would "fight through other means such as massive rallies".

From our position in Britain, it is of course impossible to gauge what possibilities of organising a fightback may exist in the present context in Korea, and therefore to make a judgment on the KCTU's decision to cancel its call for a general strike. All one can assume is that this decision must have caused deep despair in the ranks of the KCTU, judging by the moving letter left by a 40-year old KCTU member at a Daewoo shipyard to his fellow workers, before setting himself ablaze as a protest against the planned laws: "When millions of workers follow the instructions of the KCTU", he wrote, "then the layoff attempts can be blocked. If the labour reform law is passed, just imagine how much businesses will harass workers."

In any case, those among the delegates at the KCTU representative conference who argued against helping Kim Dae Jung and the chaebol bosses to "manage" the crisis, and in favour of the working class bringing the chaebol bosses to account for their role in the financial crisis, and forcing them to use their private wealth, carefully stashed away over the years across the world's tax havens and rich countries, in order to foot the bill of the economic mess they have created, were unquestionably right.

Failure to do this in Britain has had catastrophic consequences. The British working class has had a long and bitter experience of "crisis management" by union leaders bargaining for "acceptable" job cuts in return for productivity gains and more flexibility. And the result has been two decades of social degradation, which have marginalised millions of working class people by depriving them of any hope of ever working again, while bringing about Blair's dream of a "flexible labour market" - that is turning the clock back through drastically increased exploitation.

In the much more serious crisis which is shaking South Korea, it is not difficult to imagine what the consequences of such a policy would be. There, for the working class, it is not a matter of slow decay as it has been in Britain, it is a matter of life and death.

The South Korean working class has proved time and again its courage and dynamism, and its ability to fight the capitalist class, even in the difficult conditions of repressive dictatorships. Let us hope that it will not allow itself to be diverted up a blind alley, in the name of "national interest" or similar traps, and that instead, it will target capitalist profit and the profiteers, in an all-out counter-offensive, as the only way to defend its class interests in a situation of acute crisis.