KOREA AT CROSSROADS WITH LABOR LEGISLATION

C O N F I D E N T I A L SEOUL 003064 SIPDIS SIPDIS E.O. 12958: DECL: 12/10/2014 TAGS: ELAB PGOV PREL KS SUBJECT: KOREA AT CROSSROADS WITH LABOR LEGISLATION Classified By: POL M/C Joseph Y. Yun. Reasons 1.4 (b,d). SUMMARY -------------- ¶1. (C) Following a meeting on September 2, the Korean Tripartite Commission (KTC) announced that several of the key players at the meeting agreed to a five-year ban on multiple trade unions in the workplace while continuing to allow the provision of salaries by companies to full-time unionists. Although nothing is final until all of the parties to the commission reach an agreement, the mere possibility of extending the ban on multiple unions, which has already been in a holding pattern for almost ten years, marks a low point in the power wielded by the Ministry of Labor. In the midst of the third round of FTA negotiations in Seattle, it also sends the wrong signal to U.S. negotiators who are looking for the Ministry of Labor to more aggressively propose and support laws relating to workplace freedoms. END SUMMARY. BACKGROUND ON TRIPARTITE COMMISSION -------------- ¶2. (U) On Saturday September 2, the 10th tripartite meeting of the government's new reform plan was held. Representing government, management, and labor, delegates to the Commission are responsible to hammer-out issues relating to labor legislation while getting their respective constituents to buy into the new legislation before it goes to the National Assembly for a formal vote. The legitimacy of the Commission has been called into question in the past after one of the two largest trade unions (Korean Confederation of Trade Unions, or KCTU) withdrew from the Commission in 1999 following the perceived trend by the government toward stricter controls over unions. Labor negotiators were dealt a similar blow last week when the other large trade union, Federation of Korean Trade Unions (FKTU),withdrew from the 14th Asian regional meeting of the International Labor Organization being held in Busan Korea. Despite FKTU's widely publicized withdrawal from the ILO meeting, they surprised many by showing up for the tripartite meeting on September 2. CORE ISSUES -------------- ¶3. (SBU) The two issues at the heart of the current meetings are whether multiple labor unions should be allowed in the workplace and whether full-time union employees should continue to be on the payroll of the employer. Following a law passed in 1997, more than one trade union is allowed in the workplace although the law has been on hold since it was passed. The first five-year moratorium on multiple unions ended in 2002 at which time it was extended for another five years until 2007. With the current ban set to expire at the end of this year, employers have been growing uneasy at the prospect of having to deal with more than one labor union on a regular basis. (NOTE: Labor unions in Korea are known for their tendency to strike or slow down production in an effort to extract relatively large pay increases and other concessions from employers. END NOTE). Kwak Sung-soo, General Manager of Labor Relations at the Hyundai Motors Corporation, told poloff that although he was not personally concerned about the notion of more than one trade union within Hyundai, the Hyundai chairman was concerned following yet another year of costly labor negotiations. Kwak believes that given the choice between two unions, most employees would align with the larger union thereby limiting the likelihood of having two or more unions as negotiating partners. ¶4. (SBU) The second issue relates to the standard practice throughout Korea for employers to continue paying the salaries of workers who take full-time positions with a union. Not only does this arrangement place a heavy financial burden upon the employer but it also calls into question the allegiance of the full-time union workers to the rank and file union members. Her Tae Goo, the leader of the Labor Relations Team at POSCO, the largest steel manufacturer in Korea, said that there is one full-time union representative for every 180 workers at his plant. When Her visited POSCO's joint operation located in California, he was astounded that the ratio of workers to union officers there was 800:1. Given the large number of full-time unionists in Korea, the financial burden on the employers is substantial. Although employers are looking to drop union workers from the payroll for financial reasons, unions portray the action as an attempt by employers to limit the activities and strength of the unions. RESULTS OF LATEST TRIPARTITE MEETING -------------- ¶5. (SBU) In the most recent tripartite meeting, a tentative deal was struck between the labor contingent consisting of FKTU and the Korean Employer's Federation (KEF) and the management contingent represented by the Korean Chamber of Commerce and Industry (KCCI) to extend the moratorium on multiple unions for another five years. This was a trade-off for continuing to allow union employees to remain on the payroll of employers while only working for the union. Noticeably absent from the negotiations was KCTU who said that they cannot support a deal that only represents a "temporary solution." With September 7th marked as the date when the Ministry of Labor said it would pre-announce the new legislation, there is a great deal of pressure on the members of the commission to quickly come to a consensus. Possibly due to this pressure, Minister of Labor Lee Sang-soo announced last week that he was planning to push forward with legislation aimed at introducing a roadmap for improved ties between the government, labor and management, even if the three sides failed to produce a compromised draft of the roadmap. Since that initial statement, Lee has back-pedaled slightly by saying that the Ministry of Labor could delay the date of the pre-announcement from September 7th for up to a day if there are signs of progress on more clauses in the agreement. COMMENT -------------- ¶6. (C) The ROKG is in a difficult position, caught between supporting the current deal that is being brokered between management and labor while appearing weak to the general Korean population and international observers. The best-case scenario for the government would be if KCTU were to speak out more aggressively against the tentative deal and rendering it dead on arrival, thereby relieving the Labor Ministry from having to choose sides. A spokesman for the Ministry of Labor made the following announcement on September 3: "We cannot afford a longer delay for the pre-announcement as the reform bill has to be legislated within this year. The issues on which agreement is not reached can be discussed further at the National Assembly." Based on this comment, the Ministry of Labor may choose to pass the buck to the National Assembly and let them bear the brunt of any unpopular concessions that may be necessary. END COMMENT. VERSHBOW