South Korean Parliament Adopts Economic Reforms in IMF Pact
February 14, 1998
Associated Press
SEOUL, South Korea -- Parliament met a key condition for an International Monetary Fund bailout Saturday, approving an economic restructuring package that includes measures making it easier for businesses to lay off workers.
The IMF, which organized a $57 billion bailout for South Korea's battered economy two months ago, demanded the country make its labor market more flexible to help attract foreign investments.
The reform package had stalled for two weeks in parliament, raising doubt on President-elect Kim Dae Jung's ability to deliver it by a midnight Saturday deadline.
As international and domestic pressure mounted, rival parties struck a last-minute compromise and passed 17 economic reform bills, minutes before the deadline.
There was no immediate reaction from South Korea's militant labor unions, which have threatened to call nationwide strikes in auto and other key industries.
The new legislation, among other things, gives the country's bloated, debt-ridden conglomerates the freedom to trim their work forces, effective immediately, and become more competitive.
In return, it requires the family-run conglomerates to eliminate the practice of hidden cross-funding by their many subsidiaries.
Such reorganization was deemed vital by the IMF and most Western governments to wooing back foreign investors who fled the country last year, aggravating a financial crisis.
But the labor unions, accustomed to decades of lifetime employment, has resisted the layoff bill, which could drive up to one million workers out of their jobs.
Until now, layoffs have been virtually impossible without the approval of labor unions or a court.
The unions grudgingly accepted layoffs early this month in exchange for greater labor freedom. But two days later, they scrapped the agreement and called for a nationwide strike to kill the bill.
Then on Friday, bowing to concern that labor unrest would push the country deeper into financial turmoil, the workers backed down and canceled the strike. |
