Roh’s positions on labor unclear

By Koh Hyun-kohn, JoonAng Ilbo, 23 December 2002

President-elect Roh Moo-hyun’s tenure, which begins Feb. 25, has laborers hopeful and companies tense since he is known as a pro-labor person. But Mr. Roh’s remarks deviated a bit from those sentiments on Friday in his first press conference since his election win.

Workers in some large trade unions are guaranteed protection from layoffs. I will settle the problem through compromise, Mr. Roh said, indicating that he felt the Korean labor market was partly rigid.

Mr. Roh also said that large companies should be distinguished from jaebeols. The business activities and growth of large companies are important to the national economy, Mr. Roh said. But we should correct the irrational jaebeol system now, or it will become a heavy burden to the economy.

The president-elect is likely to keep the current administration’s policy toward large companies, said Jeong Kap-young, a professor of economics at Yonsei University. He proposed various new measures to control jaebeols during the election campaign. But it would not be easy for him to execute the measures, considering the markets’ reactions, Mr. Jeong said.

At a seminar in July held by the Federation of Korean Industries, a lobbying group of large companies, Mr. Roh said that companies sometimes reaped where they had not sown due to problems inherent in the jaebeol system. Unless we prevent the abuse of power and unfair practices by jaebeols, the market principles will not work and the national economy will not see solid growth, Mr. Roh said.

The president-elect has also said that until the practices of jaebeols change he will maintain the 25-percent ceiling on investments in other companies by conglomerates with at least 5 trillion won ($4.1 billion) in assets. He has also said that he will continue prohibiting conglomerates -- those with at least 2 trillion won in assets -- from guaranteeing their affiliates’ debts.

Mr. Roh plans to introduce a system that will forcibly separate a financial-service company from the business group it belong to if the company illegally provides funds to a unit of the group. Mr. Roh also plans to allow class-action lawsuits by shareholders.

Though jaebeols will suffer some inconvenience, their business activities will not be hindered, said You Jong-il, an economic adviser to Mr. Roh and a professor at the state-run Korea Development Institute.

But the Federation of Korean Industries has said that the ceiling on investments by conglomerates exists in no other country, and the restriction will put large domestic companies at a disadvantage against foreign firms.

Mr. Roh has expressed the view that the government should intervene in the relations between labor and management. He repeatedly said during the election campaign, I will become a president who will mediate conflicts between labor and management on the spot.

But an official at the Ministry of Finance and Economy said, There is a limit to the government’s ability to promote reconciliation between labor and management.

Some analysts warn that labor disputes may increase under Mr. Roh’s administration because the workers now expect more.

Wages and working conditions for employees contracted for less than one year are likely to improve under the new administration. Mr. Roh believes that laws should force companies to give short-term employees the same rights as long-term employees.