In South Korea, employees brace for IMF reforms

January 8, 1998
Web posted at: 3:55 p.m. EST (2055 GMT)

SEOUL, South Korea (CNN) -- As South Korean government officials prepared Thursday for a new round of talks with international banks over the country's staggering short-term debts, radical labor groups said they are planning a campaign against IMF reforms.

Thursday's bank meeting in New York aims to reach an agreement on rescheduling South Korean debt payments totaling more than $20 billion, which come due at the end of the month. The country faces another estimated $20 billion debt coming due in February and March.

Coming to an agreement on the January debt now would give South Korea more room to implement reforms mandated under the International Monetary Fund-led bail-out package arranged last month. That package stood at $58.35 billion as of January 6.

-- Mike Chinoy's report from South Korea -- 2 min. 30 sec. VXtreme video

Although the IMF has deemed massive economic reforms as a necessary hardship for the ailing Asian economy, South Korean workers fear the future. The right to work has traditionally been sacrosanct here. Now, uncertainty about job stability is on the rise.

Nara Merchant Bank, one of many whose unrestrained loans to giant conglomerates over the years helped fuel South Korea's economic crisis, is just one of the many financially shaky companies in South Korea now.

"A lot of people working in the firm are worried about the future," said Lee Jae-woo, one of the bank's employees. "Frankly speaking, I have some worries about my future too. If our bank shuts down, everyone has to go home. If we survive, we still may have to cut staff by 30 to 40 percent."

Organized labor groups attempt to block government changes through violent street demonstrations

Of all the issues facing South Korea as it struggles to revive its battered economy, none is more painful, or politically explosive, than the question of unemployment.

By law, it has long been virtually impossible for a South Korean company to fire its workers. Amending the termination law has been one of the demands made by the IMF in return for its bailout. President-elect Kim Dae-jung, who takes office in February, has already promised to follow the IMF's dictum.

"We have to do it, it has to be done. It may be very difficult, but we are determined," said You Jong-keun, one of the president-elect's advisers.

Organized labor, no less determined, has blocked all previous attempts to change the law, often with violent street demonstrations. Radical labor groups now say they are once again planning a campaign of demonstrations and protests against IMF reforms.

The anger among workers is understandable. South Korea has virtually no social security system. If the law is changed and the result is hundreds of thousands of layoffs, as many here are predicting, the situation for the unemployed could become desperate.

"There will be very strong anger, and also a very strong collective resistance," said the Korean Confederation of Trade Unions' Yoon Young-mo.

Some observers believe President-elect Kim, who won with strong labor support, may be able to convince workers to accept layoffs. Whether he succeeds or fails could well determine whether he can lead South Korea out of its current economic disaster.

Correspondent Mike Chinoy andReuters contributed to this report.

Related stories:

• S. Korea president to pardon jailed ex-presidents - December 20, 1997
• Celebrations and uncertainty in South Korea - December 19, 1997
• South Korea's president-elect warns of 'hardships' ahead - December 18, 1997
• Financial woes keep South Korea in turmoil - December 12, 1997
• South Korea, IMF try to finalize economic bailout - December 2, 1997

Related sites:

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• Association of Southeast Asian Nations (ASEAN)
• ASEAN focus group-- advice on doing business in ASEAN countries
• International Monetary Fund (IMF)
• Asia-Pacific Economic Cooperation forum (APEC)
• Korean Ministry of Finance and Economy
• Korean Embassy in Washington DC

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