LABOR SNAPSHOT: THE PLAYERS

UNCLAS SEOUL 000507

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EAP/K AND EB/TPP/BTA
PASS USTR FOR CUTLER AND KI

E.O. 12958: N/A
TAGS: ECON ELAB ETRD KS PGOV
SUBJECT: LABOR SNAPSHOT: THE PLAYERS

REF: A. 05 SEOUL 3772


B. 05 SEOUL 5285

C. SEOUL 14

D. 05 SEOUL 638

E. 05 SEOUL 3272

F. 05 SEOUL 4969

G. 05 SEOUL 2627

H. 05 SEOUL 529

I. 05 SEOUL 4819

J. 05 SEOUL 4703

SENSITIVE BUT UNCLASSIFIED -- PLEASE HANDLE ACCORDINGLY

SUMMARY AND INTRODUCTION
--------------


1. (SBU) Upcoming U.S.-ROK FTA negotiations will include a
close USG look at Korea's labor-management relations, a
tumultuous sector charged with decades of conflict. This is
the first of three cables that will draw a contemporary
portrait of industrial relations in the ROK. This cable
describes the main players that shape the labor debate: the
Ministry of Labor (MOL),the Korean Tripartite Commission
(KTC),the Democratic Labor Party (DLP),the major union
federations, and the major employer groups. The second
cable, "Labor Snapshot: The Issues," will provide background
on the two most controversial issues in labor today, the
government's "irregular" worker legislation and its labor
reform "roadmap." A final report, "Labor Snapshot: Meeting
the Standards," will analyze Korean law for compliance with
the core labor standards set forth in the Trade Promotion
Authority Act. END SUMMARY.

MINISTRY OF LABOR
--------------


2. (SBU) Pushing reforms that pleased neither labor nor
management, the MOL has been an embattled ministry over the
past year. The head of the ROK's largest labor federation
recently admitted that labor-government relations "are at
their worst since the establishment of the country." Under
Labor Minister Kim Dae-hwan, who stepped down on February 10,
the linchpin of the Ministry's effort to promote a flexible
labor market while protecting worker rights was a bill
addressing contract, short-term, temporary and other
"irregular" workers. As will be discussed septel, organized
labor raised strong objections to the bill and vilified
Minister Kim and the MOL for promoting it. Labor groups
repeatedly called for Kim's ouster.


3. (SBU) Organized labor groups have also criticized the MOL
for being too pro-business. Indeed, the Ministry under Kim
Dae-hwan has been intolerant of illegal or unreasonable
strikes. For example, in August 2005, Minister Kim invoked
emergency mediation to end a 25-day Asiana Airlines pilots
strike (Ref A). According to the Trade Unions and Labor
Relations Adjustment Act (TULRAA),the Minister of Labor may
invoke emergency adjustment for a labor dispute where
industrial actions relate to a public service, are conducted
on a large scale, pose an explicit threat to the national
economy, or are highly likely to jeopardize people's daily
life. Once emergency mediation was invoked, the union had to
proceed to mediation and return to work. This action drew
the unions' ire as it was only the third time in the ROK's
history that the MOL had used its emergency mediation
authority. Kim then invoked it again, for the fourth time,
in December 2005 to end a four-day Korea Airlines pilots
strike (Ref B). In both instances, Kim said that the pilots'
strikes caused a very negative impact on Koreans' daily
lives, as well as the national economy. Organized labor's
call for Kim's ouster grew even louder.


4. (SBU) Kim resigned in February 2006 as part of a cabinet
reshuffle and was replaced by Lee Sang-soo (Ref C). Lee is a
labor lawyer and former Uri Party lawmaker. He appears so
far to have a reasonably cordial relationship with organized
labor. Lee said upon his appointment that he would "strive
to resume talks with unions. I plan to visit the two leading
labor federations soon and have heart-to-heart conversations
with them." Lee, however, has been hounded by questions
regarding his fitness for office. He had been arrested and
jailed for one year in connection with illegal political
donations he solicited as manager of President Roh's 2002
presidential campaign. Meanwhile, prosecutors have opened a
new investigation into false statements Lee allegedly made
during a 2005 by-election campaign.

KOREAN TRIPARTITE COMMISSION
--------------


5. (SBU) The Korean Tripartite Commission (KTC) was formally
established in 1999 as both a Presidential advisory body and
a forum for social dialogue on labor-management issues. Its
primary objectives are to provide a forum for consultation,
dialogue and compromise among the tripartite actors; to
support socio-economic development by establishing healthy
industrial relations based on social integration; and to
realize participatory democracy by encouraging cooperation
among labor, management and government. To date, it has been
credited with developing social consensus on a range of
issues, such as legalization of teachers' unions, enhancing
the social security system, shortening the workweek, and
legalizing the public servants' union.


6. (SBU) The KTC, however, has been hobbled by the failure
of organized labor to participate fully (Ref D). The Korean
Confederation of Trade Unions (KCTU),the more militant of
Korea's two main labor federations, has refused to engage
since 1999. Though the more moderate Federation of Korean
Trade Unions (FKTU) has participated in KTC proceedings, the
FKTU does not represent the progressive core of the labor
movement. Moreover, the FKTU between July 2005 and January
2006 joined the KCTU boycott of the KTC over accusations that
the government was unresponsive to labor sentiment (Ref E).


7. (SBU) Perhaps recognizing the limits of the KTC,
President Roh in October 2005 suggested the creation of a
"Joint Conference for Unity of the People," which would
convene with the participation of "representatives of
economy, labor, civil social organizations, religion,
farmers, women, specialists and political parties" to deal
with economic and social issues, including labor-management
relations (Ref F). This idea is being developed in the Prime
Minister's Office and, if realized, may subsume the functions
of the KTC.

TRADE UNIONS
--------------


8. (SBU) Korea's unionization rate is relatively low and
getting lower. According to December 2005 government
figures, which were based on 2004 data, the trade union
organization rate was 10.6 percent. Union membership has
been in steady decline since its 1989 peak of 19.8 percent.
The number of unions in 2004 also decreased from 2003 by 240
to 6,107, and the number of union members decreased by 13,106
to 1,537,000. But this has not meant that Korea's unions
have become more docile. In general, Korean labor groups
have been quick to escalate disputes and commonly resorted to
work slowdowns, abuse of leave and disruption of business by
holding rallies, wearing casual clothes, displaying protest
signs at the workplace, or engaging in sit-in strikes. In
2005, a total of 228 strikes occurred between January and
August, with 105,577 participating workers. While these
strikes resulted in 434,199 lost workdays, this represented
only 43 percent of the previous year, which registered
1,010,149 days lost during the same period. But despite this
trend of relatively shorter strikes, both the public and the
government have become much less tolerant of strikes by the
"union aristocracy," who, relative to the rest of the
workforce, earn higher wages and enjoy better benefits and
job security.


9. (SBU) The FKTU and the KCTU are Korea's two major labor
federations. The government recognizes a range of other
labor federations, including independent white-collar
federations representing hospital workers, journalists, and
office workers at construction firms and at government
research institutes. Labor federations not formally
recognized by the labor ministry have also generally operated
without government interference.


10. (SBU) FKTU: The FKTU boasts 780,000 members and is
considered to be relatively moderate. It is comprised mainly
of unions at small and medium sized enterprises. The
government helped establish FKTU in 1946 as the Korean Labor
Federation for Independence Promotion (KLFIP) with the
purpose of opposing pro-communist worker organizations. In
1960, the KLFIP became the FKTU and was the only
legally-recognized union organization in the ROK, a status
that it enjoyed through the 1990s. Among progressive labor
circles, the FKTU still carries a stigma for cooperating with
the ROK's pre-democratization military regimes. Although it
tended to work through political dialogue and compromise, the
FKTU took a more aggressive stance in June 2005 after a
cement truck struck and killed an FKTU regional leader during
a demonstration. The FKTU blamed the government for the
incident because the union representative placed himself in
harm's way because of his opposition to the government's
irregular worker legislation.


11. (SBU) Over the past year, corruption scandals have
plagued the FKTU (Ref G). In May 2005, prosecutors indicted
the former FKTU President Lee Nam-soon for accepting about
USD 200,000 in kickbacks associated with the construction of
a union welfare center. Prosecutors indicted the FKTU
Secretary-General on a related charge. Although the FKTU

SIPDIS
launched a number of reform measures designed to increase
union accountability and transparency, these scandals have
shaken the public's confidence in the organization.


12. (SBU) KCTU: With the recent addition of the
140,000-member strong Korean Government Employees' Union,
KCTU membership rolls approach 800,000. Most KCTU members
are workers at large enterprises. Boasting roots in the
ROK's democracy movement, the KCTU has been the more militant
of the two major labor federations and accounts for over 80
percent of all strikes. After democratization, the ROK
experienced a rapid increase in the number of unions, many
forming in reaction to the "collaborationist" tendencies of
the FKTU. In the early 1990s, the National Council of Trade
Unions, the Congress of Industrial Unions, and the Large
Plant Union Organization merged into the National Council of
Trade Union Delegates, which in 1995 became the KCTU. It
became a legally-recognized trade organization in 1998.


13. (SBU) Like the FKTU, the KCTU has also been plagued by
corruption scandals. In January 2005, prosecutors charged
KCTU leaders of a Kia Motor Corp. union with taking bribes
from job applicants in exchange for employment (Ref H). In
February, prosecutors arrested the former head of the KCTU
Kookmin Bank union on embezzlement charges. In May,
prosecutors arrested leaders of the Hyundai Motor union,
KCTU's biggest member organization, on similar charges. In
October, KCTU Chairman Lee Soo-ho and the entire KCTU
leadership stepped down following allegations that the Vice
President had accepted about USD 80,000 in bribes from taxi
driver unions (Ref I).


14. (SBU) The departure of the relatively moderate Chairman
Lee left a leadership vacuum at the KCTU, with several
factions vying for control. A February 10 convention to
elect a new chairman broke up without a vote. Although
another meeting is scheduled for February 21, insiders
believe that hardliners, led by Lee Jung-hoon, may block a
vote in that meeting in an effort to prevent the election of
more conciliatory leaders.

DEMOCRATIC LABOR PARTY
--------------


15. (SBU) In January 2000, labor activists affiliated with
the KCTU formed the Democratic Labor Party (DLP). The new
party, which built on an earlier affiliation of labor
politicians called Peoples' Victory 21, fielded 21 candidates
in the April 2000 National Assembly general elections, but
failed to win any seats. In the 2004 general elections,
however, the DLP won 13.1 percent of the vote and 10 seats in
the 299-seat National Assembly. This was the first time that
any labor party has won representation in the Assembly.
Today, the DLP claims about 61,000 members and holds nine
Assembly seats (one member had to give up his seat in 2005
due to election law violations).


16. (SBU) The DLP has achieved mixed reviews on its
performance in the Assembly. While it has been successful in
passing a bill granting further rights of public access to
the disabled, it has achieved more notoriety for its
obstructionist tactics in blocking legislation. In
particular, the DLP on several occasions prevented discussion
of the government's labor reform legislation by physically
blockading the National Assembly meeting room. The DLP has
also been tainted by the KCTU corruption scandals. Many
believe the scandals were a main reason for the DLP's October
2005 by-election defeat in Ulsan, despite the region's strong
union presence (Ref J). On February 10, the DLP elected Moon
Sung-hyun, the former head of the Korean Metalworkers
Federation, as its president.

EMPLOYER ORGANIZATIONS
--------------


17. (SBU) There are five major employers' organizations in
the ROK: the umbrella Korean Employers Federation (KEF); the
Federation of Korean Industries (FKI),which traditionally
represents Korea's largest conglomerates (the "chaebol"); the
larger Korea Chamber of Commerce & Industry (KCCI),an
omnibus organization historically espousing the views of
small and medium-sized, as well as larger Korean firms; the
Korea International Trade & Industry Association (KITA),a
trade promotion agency; and the Korea Federation of Small and
Medium Business (KFSB).


18. (SBU) Together, the five groups make up the Council of
Korea Employers' Organizations (CKEO). The KEF serves as the
CKEO secretariat and is responsible for coordinating the
opinions of the member organizations. These employers'
organizations generally do not participate in collective
bargaining. Instead, they tend to influence the more
working-level Korean government policy-making agenda and also
represent management views in Tripartite Commission and
National Labor Relations Board discussions.
VERSHBOW