As GM union faces big job losses, South Koreans turn cold shoulder

Kumho Tire

09/04/2018 24:00

* Public unhappy with big unions as income gap widens
    * Once democracy champions, now seen as militant 'interest
group'
    * Unions criticised for pursuing gains vs young job seekers
    * Union membership halves to 10 pct in last two decades

    By Hyunjoo Jin
    BUPYEONG, South Korea, April 9 (Reuters) - When Lee Bum-yeon
lost his job along with nearly 2,000 other union workers in 2001
after South Korea's Daewoo Motor went bankrupt, his neighbours
at supermarkets and bakeries gave his young daughters free
snacks and bread.
    “People felt sorry. People felt heart-broken. They were
worried how we were going to make a living," 55-year-old Lee
said.
    Now, with General Motors  GM.N  cutting some 2,600 jobs and
threatening to leave South Korea in the absence of steep union
concessions, the once sympathetic public is nowhere to be seen.
    "I don't think anyone is feeling for us anymore," a
grim-faced Lee, who was rehired by GM a year after it bought
Daewoo in 2002, told Reuters outside GM's Bupyeong factory near
Seoul. 
    South Korea's reputation for militant unions and rigid
labour practices have long been cited as contributing to high
labour costs and a persistent discount for corporate Korea.
Shares of South Korean companies are typically undervalued in
comparison to their global peers, a phenomenon known as the
"Korea Discount".
    Now, like unions in other major auto producing countries,
Korean labor leaders are under pressure to make concessions as
automakers look to shift jobs and investment to countries with
lower costs.
    “I expect militant unions to become more reasonable, which
would lead to enhanced labour flexibility," said Kim Sung-soo, a
fund manager at LS Asset Management. "Unions have learned a
lesson from past incidents where they can lose all if they go
militant."
    
    DEMOCRACY TO MILITANCY
    Unions at large firms spearheaded South Korea's fight for
wages and basic labor rights against powerful family-run
conglomerates known as chaebol, during the country's rapid
industrialization in the 1980s and 1990s.
    They also led South Korea’s democracy movement under then
authoritarian governments, enjoying backing from non-unionised
workers at small firms and the broader public.
    But the power and influence of the unions has been
weakening. Much of the public now seeing them as an "interest
group which seeks to maximise their own interest", said Kim
Tai-gi, an economics professor at Dankook University in Seoul.
    Images of auto workers with shaved heads and red head bands
clashing with riot police have come to epitomise today's public
perception of unions.
    Union membership has halved in the last two decades to just
10 percent of workers in 2016, according to labour ministry
data. That is the second-lowest after Turkey among member
countries of the Organisation for Economic Co-operation and
Development. 
    GM, which employees 16,000 South Korean workers, announced
in February it would close its Gunsan plant and weigh options
for its three other factories in the country. 
    GM's union already said it will not seek a pay rise or
bonuses this year, the first time it will forgo such demands
during annual wage talks since GM aquired Daewoo. 
    But GM warned its loss-making South Korean operations would
file for bankruptcy unless the union agreed to further cost cuts
by April 20.  urn:newsml:reuters.com:*:nL3N1R86MN
    Cha Min-song, a 29-year-old nurse from Suwon, south of
Seoul, couldn't care less about the plight of the big auto
unions.     
     "They already earn way more than most South Koreans, but
young people are struggling to find jobs, many of them are just
temporary workers," Cha said. 
       
    'OBSESSED' WITH OWN INTEREST
    The 1987 democracy movement and the creation of unions at
Hyundai Group and other large conglomerates led to widespread
wage increases in the early 1990s.
    But after massive layoffs following the 1997-1998 Asian
financial crisis, workers at big companies became "obsessed"
with their own job security, said Yoo Hyung-geun, a professor at
Pusan National University.
    Their fight for job security and more wages often came at
the expense of young job seekers, and workers at smaller firms.
    Workers at firms with 30 to 99 employees earned only 68
percent of what those at companies with more than 300 employees
made last year, according to Reuters' analysis of labour
ministry data. The corresponding figure was 78 percent in 1993. 
    Meanwhile, youth unemployment in South Korea hit a record
9.8 percent in 2017, almost three times the national rate, and
worse than Japan's 4 percent and 8.1 percent in the United
States.
    The government of President Moon Jae-in, a former human
rights lawyer who defended union activists, is advocating for
non-unionised temporary workers, while calling on unions to try
to regain public support. 
    “We feel very betrayed by the government and Moon," said a
union official at Kumho Tire  073240.KS . "Not just the
president but many cabinet members were engaged in the labour
movement in the past, but they are now saying no to us." 
    Kumho's labor union protested and threatened to strike when
creditors agreed to sell the troubled company to China's Qingdao
Doublestar last month. In the face of public and government
pressure, the union eventually agreed to the deal.
    "The public do not understand why highly paid regular
workers are protesting and walking out, when temporary workers
can’t even strike because they are at risk of losing their jobs
at any moment," the Kumho union official said.
    Others acknowledge changes are needed at the unions.
    About 50 GM union officials breached a security door to
executive offices then damaged company property, GM Korea said
in a memo to employees last week.
    "We have to honestly admit that we have lost our way," said
Lee, the GM worker.

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Unions and membership rate    https://tmsnrt.rs/2GOJC2Y
Wage gap by company sizes    https://tmsnrt.rs/2InLI6S
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 (Reporting by Hyunjoo Jin; Additional reporting by Haejin Choi,
Ju-min Park and Christine Kim in SEOUL, Editing by Soyoung Kim
and Lincoln Feast.)
 ((hyunjoo.jin@thomsonreuters.com; 82-2-3704-5685; Reuters
Messaging: hyunjoo.jin.thomsonreuters.com@reuters.net))