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