16-18 March, 1998    


1. The current economic and financial crisis in Korea has already produced severe economic hardship for Korean workers and their families and this risks increasing over the months ahead. At the same time the election as President for the first time of an opposition leader, Kim Dae-Jung, who has himself been a direct victim of past military governments, gives hope that pluralist democracy is now firmly established as part of the solution to overcoming the current crisis and managing change in the future. 

2. The establishment in January 1998 of a Tripartite Commission including the two Korean trade union confederations, the FKTU and the KCTU, to seek agreement on measures to overcome the economic crisis was a significant event. The agreement concluded by the Tripartite Commission on February 6, 1998, if and when implemented in legislation would make an important move towards the objective of establishing freedom of association in Korea to which the government of Korea committed itself at the time of its accession to the OECD. The main parts of the agreement concerning trade union rights have however yet to be enacted, whereas parts of the agreement facilitating companies to lay-off workers were enacted immediately. At the same time even with the proposed changes some of the contraventions of freedom of association identified by the ILO in the past remain and further legal changes are required. 

3. It should also be pointed out that the process of accepting legal changes which would permit mass lay-offs when only accompanied by the establishment of a partial unemployment insurance system was not an easy compromise for the unions to accept. Both FKTU and KCTU leadership signed the tripartite agreement, but the rank and file of the KCTU subsequently rejected the agreement and their leadership resigned. In the months ahead it is essential that the new government moves quickly to guarantee basic union freedoms in both legislation and in administrative decisions. It is also essential that mass lay-offs are minimised and active labour market policies and social security systems are built up so that Korean workers can establish confidence in the tripartite process. 

4. This note firstly gives a preliminary assessment of the recommendations of the Tripartite Commission against the background of the solemn commitment made by the Korean government at the time of accession to "reform its legislation in line with internationally accepted standards, including such basic rights as freedom of association and collective bargaining (2) subsequent Freedom of Association Committee Reports of the ILO. It points out where further action is needed and urges the OECD to work with the ILO and Korea to assist early action. It secondly gives suggestions as to where OECD work, in complement to that of the World Bank can help minimise the social cost of the current crisis and associated labour market changes in Korea. 

The Tripartite Commission's Initial Proposals for Labour Law Reform: Developments on Freedom of Association 

5. The ILO Freedom of Association Committee Report on Korea, approved by the Governing Body in June 1997, commented on the Trade Union and Labour Relations Adjustment Act (TULRAA) of March 1997. It noted that although the Act made progress in some areas it did not amend certain elements of Korean labour law which the ILO had previously deemed to be contrary to the principles of freedom of association. These concerned essentially the rights of teachers and public servants to join trade unions, the illegality of trade union pluralism at the enterprise level, and the rights of dismissed workers to belong to a trade union. It asked the Government to register as legal national and sectoral union bodies the KCTU and some of its constituent federations. It also asked that workers still imprisoned for trade union activities be released and that charges pending against others, including the then KCTU President be dropped. A high-level ILO tripartite mission visited the country to examine these issues in February 1998, and the ILO Freedom of Association Committee and Governing Body is again due to issue a report on Korea at its current (March, 1998) session. 

6. Whilst waiting for the ILO's authoritative recommendations, the following comments give an initial TUAC reaction to the Tripartite Commission's proposals affecting freedom of association, against the background of earlier ILO rulings. They have been drawn up in consultation with the secretary of the Worker's Group of the ILO. 

7. The recognition of the KCTU: despite the removal of the ban on union plurality at national and sectoral level in the March 1997 Trade Union and Labour Relations Adjustment Act, the Korean authorities rejected the KCTU's "notice of establishment". The principal reason was that an "illegal" body, the teachers union Chunkyojo - was a member. The Commission's proposal to allow trade union rights for teachers would, if enacted, remove this barrier to the legalisation of the KCTU, but under the current proposal not until July 1999. This lends weight to the arguments set out below in favour of the immediate implementation of freedom of association for teachers. Notwithstanding this, the KCTU could remain an illegal organisation due to continuing restrictions on the eligibility for union membership of the elected officers of the organisation. The Commission's recommendation that unemployed workers be authorized to join an industry based or regionally based union which is not enterprise based still leaves intact a technical barrier to the legalisation of the KCTU, namely, that a dismissed worker cannot remain a member of a union, and as such a union with such a member cannot be registered as a trade union. TUAC would recommend therefore that the Commission when reconvened propose, and the government enact, measures to overcome the remaining technical barriers to the legal recognition of the KCTU. 

8. Trade union rights for teachers: the decision of the Commission to recommend that teachers' unions be permitted is welcome and as pointed out above could remove the most important hurdle to recognition of the KCTU. The OECD should however encourage early implementation of this recommendation. There is no need to wait until July 1999 with the risk that those vested interests who have in the past blocked the granting of trade union rights for teachers could do so again. TUAC would urge the government to make a strong statement in support of early implementation of the Commission's recommendation in this area. 

9. The establishment of Works Councils for Government Officials as from January 1999: this development is welcome in its own right, but only as a first step. Rapid progress needs to be made towards granting full rights to organize for all public service workers. 

10. The definition of essential public services: it is of concern that the continuing definition of essential public services, which are denied the right to strike includes non-essential services such as the Mint, petroleum refining, banking and transport. Legitimate disputes by workers in these sectors will still be subject to "compulsory arbitration", which violates ILO rulings in this area. It is important that the Commission, in its future work, move to resolve this anomaly. 

11. Third party intervention: Although previous prohibitions on third party intervention in industrial disputes have been lifted, unions are still required to notify the names of those assisting them in such disputes to Government. In view, particularly, of the heavy penalties for failure to notify, this requirement should be dropped. 

12. Imprisoned trade unionists: It should not be forgotten that large numbers of trade unionists are either in detention or under investigation for their legitimate trade union activity. The Government should proceed to an amnesty, and to drop charges and investigations against all those involved. 

13. The continued work of the Commission to enable the "establishment of democratic industrial relations" in Korea is welcome. The Commission's future needs to be guaranteed for the period beyond the current crisis. 

14. In addition to the comments set out above, it would also seem that further action is required to bring Korean labour law in line with ILO rulings to resolve issues such as the banning of payment of wages during strikes. Moreover prohibition on enterprises paying the wages of union representatives is a matter of serious concern to Korean unions, and represents unjustified interference in matters that should be left to agreement by the social partners on appropriate practices. 

Employment Measures 

15. In January 1998 industrial production in Korea was more than 10% down on a year earlier and unemployment had risen to more than 1 million, 4.5% of the labour force, compared with 2.6% in January 1997. In the wake of the employment law changes allowing employers to lay-off workers, unions fear unemployment surging to 2.5 million in the months ahead. Such rates of unemployment, even if they are estimated to double or triple this year, may seem unexceptional when compared with several OECD countries over the last two decades, however systems of social protection in Korea have been virtually non-existent. When the job is lost there is no social safety net, there is no unemployment insurance and little in the way of retraining provision or job placement. All of this is leading to rising inequality as the worse off are hit most. According to the Korea Development Institute "The plight of the nation's middle and poor classes, hit by the soaring consumer prices, mounting unemployment and steep wage cuts is rapidly worsening lately, in contrast, however, the cash-rich people are getting ever richer, thanks to the high interest rates and the various government measures to scale down inheritance taxes (3). If mass lay-offs become the norm a vicious circle of social instability may result. 

16. The agreement by the Korean trade union movement to support the implementation of "employment measures" to overcome the economic crisis in Korea must therefore be matched by a commitment by employers to honour their responsibilities, especially in relation to respecting the conditions for dismissal; making efforts to avoid dismissals; following the agreed procedures for dismissal and; re-hiring dismissed workers. On this the government must follow up its commitment to strictly enforce the rules governing dismissals for "particularly those which seek to take advantage of the economic crisis". 

17. The government must stand ready to supplement the agreed 5 trillion Won for the extension of the unemployment insurance scheme. Reports of current proposals to extend unemployment insurance suggest that even with the new proposals only one third to one quarter of the labour force will be covered by the scheme. There is an urgent need to fund active labour market programmes to assist the speedy re-integration of the unemployed back into employment and to avoid unemployment becoming structural. The international organisations charged with overseeing the structural economic and financial reforms in Korea must allow the government to commit resources to meet these needs, and furthermore provide such external resources as required. 

18. Similarly the government must now move forward to reform the Chaebols and ensure that the burden of adjustment is shared by all sectors of society, but in such a way as to minimise employment losses. 


19. The OECD has a key role to play in supporting Korea in this time of crisis. The Enlarged Bureau of the ELSAC must continue to monitor the prospective labour law reforms in close cooperation with the ILO. Furthermore, the moment has arrived where the ELSAC must undertake urgently a broad based labour market review on the Republic of Korea. Delaying this until 1999 would make it too late to be of real use. TUAC is ready to assist in whatever way we can with the work. 


(1) This note represents the tentative views of the TUAC secretariat; It is not a formal position of either of TUAC's affiliates, the FKTU or the KCTU. 
(2) Statement by the Secretary-General of the OECD on Korea - 10 January, 1997. 
(3) Quoted in "Recession Widens Income Disparity", Korea Herald, 5 March, 1998 


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