AMBASSADOR AND LABOR MINISTER DISCUSS ECONOMIC

C O N F I D E N T I A L SEOUL 002176 SIPDIS E.O. 12958: DECL: 10/28/2018 TAGS: PGOV PREL PINR KN KS SUBJECT: AMBASSADOR AND LABOR MINISTER DISCUSS ECONOMIC IMPACT ON WORKERS Classified By: Amb. Kathleen Stephens. Reasons 1.4 (b,d). ¶1. (C) Summary: In a cordial November 3 meeting with the Ambassador, Labor Minister Lee Young-hee commented on the need to stabilize labor-management relations, workers' concerns about the recent economic downturn, and its potential impact on the KORUS FTA. Minister Lee refuted the common perception that the Lee Myung-bak Administration is overly pro-business and said that the new government wants to protect and expand workers' rights while strengthening the rule of law. Korean business had learned a great deal from the 1997 crisis, and the Minister predicted that labor and business would work together to avoid large-scale layoffs, which could, he conceded, lead to labor unrest. Lee was optimistic about passage of the KORUS FTA in the National Assembly, and said that workers supported the agreement because of the jobs it would ensure and create. End Summary. -------------- Need to Deepen U.S.-Korea Relations -------------- ¶2. (C) On November Qthe Ambassador paid a courtesy call on Korean Labor Minister Lee Young-hee, a powerful Lee Myung-bak supporter who brought about 5 million labor votes in the December 2007 presidential election. The Minister said that in the past leftists were very powerful, but now many Koreans were worried about the relationship between Korea and the U.S. Since the new Administration took office, the relationship had improved, he said, and the two countries were cooperating in many ways, including on financial issues. In the past the U.S. had provided for Korea's security and its supported economic development, but it was very difficult to develop both economically and democratically at the same time. This, the Minister postulated, had been of concern to the U.S. Now Korea had made significant progress in democratization, and wanted to use its shared values with the U.S. to improve human rights conditions in North Korea and elsewhere. -------------- Labor-Management Relations Stabilized -------------- ¶3. (C) The Minister conceded that there had been problems in labor-management relations in the past, which had discouraged foreign investment. Korean workers had been disadvantaged by the country's rapid economic development, but working conditions had vastly improved since democratization. The new Administration was determined to normalize labor-management relations and have the rule of law take root in Korean society. Some people said the new Administration was too pro-business, but the ROKG really wanted to protect and expand workers' rights. ¶4. (C) When the Lee Administration first came into office, this perception of a pro-business orientation had caused some backlash and labor unions had been very aggressive. When the unions joined in the beef protests, however, average citizens opposed their involvement and most workers did not want to participate. Typically the labor unions had a surge in activity at the start of a new administration, but the number of strikes this year was about the same as last year. Some unions were still very aggressive, but Korea was moving in the right direction, the Minister said. He explained that, in the past, labor disputes were frequent, but if labor and management could cooperate, more foreign companies would invest in Korea, which will create more jobs. -------------- Potential for Significant Job Losses Low -------------- ¶5. (C) Minister Lee said that many workers were worried about losing their jobs amid the economic downturn. Consequently most workers this year did not demand a wage increase, so wages were about the same as last year. In the United States, the Minister opined, workers were more willing to tolerate wage cuts when business was bad, but in Korea workers often fought such cuts. Some attributed this to the lack of a social security network in Korea, but Lee claimed that the U.S. social security system was not nearly as developed as Europe's and still workers were more flexible. ¶6. (C) The Minister said that large-scale layoffs could lead to labor unrest. Ten years ago, however, Korea experienced a financial crisis and learned how to deal with it. The Minister speculated that businesses would cooperate during this economic downturn and so there would probably not be large layoffs. -------------- KORUS FTA -------------- ¶7. (C) Minister Lee noted that the world had globalized very quickly and we had to work together to revitalize the global economy. Because of globalization, the KORUS FTA would help both our countries as well as the world economy. The beef import issue was in the past, and the FTA had been sent to the National Assembly for ratification. The Minister expressed his hope that the U.S. Congress would pursue the FTA after the election. ¶8. (C) In response to the Ambassador's question about how economic conditions might affect the KORUS FTA ratification process, the Minister said that in Korea many workers thought the FTA would be beneficial, although he admitted that Korean farmers remained concerned. More Koreans were worried about the United States taking a more protectionist stance in the future. If the U.S. economy stalled, Korean exports would decrease, which would negatively affect Korean workers. -------------- Comment -------------- ¶9. (C) Lee Myung-bak came into office last February vowing to crack down on illegal labor strikes and stabilize labor-management relations. Although Labor Minister Lee Young-hee credits this policy when noting the stasis in strikes, his point about concern over rising unemployment probably hits closer to home. Korea's unemployment rate - although relatively low (3.2 percent) when compared to that of other OECD countries -- has long been source of concern for Koreans, and could actually temper labor demands. Although President Lee has few successes to show for his first eight months in office, most Koreans thus far support his labor policy, as many feel order must be preserved to encourage FDI and address the current crisis. STEPHENS