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Korea Employers Federation chairman Lee Soo-young on Thursday threatened the government with a strike by businesses if it continues to side with the unions and the unions persist with threatening industrial action. "In other words, we will quietly close down businesses at home and move them to China, India and Bangladesh," Lee said. "If that happened, jobs would disappear and unemployment would rise."
The exodus has been underway since long before Lee¡¯s threat. Korea¡¯s direct investment overseas last year reached US$9 billion, up 12 percent from 2004. Direct investment overseas by small and medium-size companies stood at $3.770 billion, up no less than 22 percent. By contrast, corporate investment in plants and facilities at home last year rose only 5.1 percent, with investment from smaller firms declining about 20 percent.
It is common knowledge that the reason Korean businesses flee to China and Vietnam is the militant unions at home. Now Labor Minister Kim Dae-hwan, who despite his job and background was faithful to economic principles, has been forced out under union pressure, and the government only looks at what the unions think when it formulates labor legislation.
A case in point is the draft bill for non-regular workers. A union demand that contract workers employed for two years or more are paid as much as regular workers, according to the KEF, will saddle businesses with an extra financial burden of W7.5 trillion (US$7.5 billion) a year. Of that, W6.8 trillion would have to be borne by smaller firms. The entire bill could entail an additional corporate financial burden of tens and trillions of won. How many businesses would be able to survive that?
Yet the Korean Confederation of Trade Unions threatens a general strike unless every last one of its demands is accepted. Politicians defend the labor camp and push businesses to make further concessions. Lee's remarks that businesspeople have no choice but to go on strike are not a huge exaggeration.
Even so, Lee's use of the provocative term "strike" is inappropriate. Businesses have to avoid confronting the unions on these terms, for their sake and the sake of the economy. If corporate investment abroad is described as a "strike," every business expansion overseas to secure global competitiveness can be misunderstood as a walkout of capital. The KEF should have sought another way of explaining its problem to the people.
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