Stitch,
Hate to sound so negative here and on the Hong Kong board, but I may(IMHO) see a train wreck coming unless the IMF does so quick footwork in South Korea. Obviously they do not want another Indonesia on their hands. So they may be forced to become more flexible and change the rules quickly. Their austerity rules as a condition of the "bailout," causes a great deal of unemployment. I don't think anyone can argue their rules are not sound, but maybe there is an argument they demand too much, too quickly?
I clipped these articles to just show that it certainly isn't all clear in South Korea yet. Remember these unions are like unions nowhere else in the world. I believe it was one or two years ago, long before the Asian Crisis, that there was bloodshed when the government first tried to reel in the unions by allowing companies to layoff workers. Well the workers went nuts, and the rule was ratified as to be meaningless. Obviously the government at that time had started to realize there was trouble on the horizon.
Maybe the lifting of restrictions for foreign investors will save the day? If so, maybe the banks won't be forced to close too many companies and lay off workers. Motorola was willing to take a $300US gamble in Korea. I believe Ford is interested in taking over Kia. Maybe this kind of investment will allow the workers to keep their jobs.
Something needs to give or it's fairly clear there may be trouble. These three articles have been edited by me to shorten them and remain on point.
MikeM(From Florida)
>>Asian dilemma: Pain Now, Gain Later
SEOUL, South Korea (Reuters) - Riots in Indonesia, labor strife in South Korea, deportations of migrant workers in Malaysia -- the wounded tiger economies are feeling the pain of reform after financial crisis struck last year. Governments that accepted reform medicine demanded by Western governments, aid agencies and bankers in exchange for rescue loans are now cajoling their people into swallowing it, as Asia's high-octane economies slow to a crawl. The medicine has largely cured the region's debt crisis, with currencies stabilized and external debt rescheduled. But it is also tipping some countries into economic turmoil.
And Asian faces are showing fear, anger and despair. In South Korea, it was thousands of enraged workers brandishing steel pipes at riot police in a May Day protest against unemployment. Analysts say a period of heightened danger has begun in the countries affected by the Asian contagion, with social upheaval accompanying the restructuring of some of the world's fastest-growing economies over the past three decades. "Asia's outlook appears shrouded in considerable uncertainty as each country grapples with slowing economic growth, political turbulence and domestic restructuring," said Jan Lee, chief economist at Hongkong and Shanghai Banking Corp in Hong Kong.
President Kim Dae-jung was to hold a nationally televised "town meeting" on Sunday to explain the dilemma to South Korea's 44 million people. South Korea's economy is expected to contract by at least one percent this year. But some analysts say Korea's gross domestic product could shrink by five percent this year. Unemployment is soaring in a region where lifetime job security was the norm and social safety nets are only now being put in place. The jobless rate hit a 12-year high of 6.5 percent in South Korea in March. It is expected to get much worse as the country's highly indebted conglomerates shed workers as they pare their empires.
The militant Korean Confederation of Trade Unions, which led the violent May 1 protest in Seoul that injured dozens, has vowed an "all-out" strike in the next few weeks.<<
>>S.Korea Auto Federation Threatens Strike on May 27
SEOUL, May 13 (Reuters) - The Korean Metal Workers Federation, which represents auto industry workers, on Wednesday threatened to strike on May 27 if their demands for job security guarantees were not met. The federation warned it would go on strike if employers did not accept their demands to negotiate a labour pact to guarantee job security. It said the Korea Employers Federation, an association of employers at 350 companies, had until May 19 to reply.<<
>>S.Korea Remains Firm On Labor Policy
SEOUL, South Korea, May 13 (UPI) - South Korean President Kim Dae- jung (''KEEM Day-joong'') says the government remains firm on its stringent labor policy against violent rallies following a May Day protest that wounded 56 demonstrators in the capital Seoul. President Kim said at a Cabinet meeting, ''The labor side must show flexibility so that the foreign investors, who are waiting outside the door with money in hand, can enter.'' Kim said: ''There is a limit to how much domestic companies can do in terms of creating jobs. That is why we desperately need foreign capital. ''
He added, ''The government will take strong action against the involvement of students in labor-organized rallies.'' More than 22,000 South Korean laborers and students took to the streets on May Day in violent protests against unfair labor actions and mass layoffs.
South Korea's labor unions are threatening to strike Saturday if requests for renegotiation on mass layoffs and employment stabilization measures are not accepted. The Metal Industries Labor Union with more than 200,000 members, also announced plans to strike on May 27 if labor demands are not met.<<
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