SKorean labor militants take one step too far, analysts say

SEOUL, Sept 7 (AFP) - An increasing number of foreign firms in South Korea are bristling at mounting labor militancy threatening their bottom line.

Concern is deep enough to have prompted the government to issue a controversial new labor relations blueprint that gives management more muscle to cope with labor unrest.

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Seven foreign companies, among them Nestle, Lego Korea, French retailer Carrefour, and Tetra Pak Korea, have been hit by labor disputes this year during which they locked out striking workers.

Swiss food and beverage firm Nestle said last week it was weighing whether to close its plant in South Korea after a July 7 strike by its 460-member union over wage hikes and a say in management.

Nestle, which began operations here in 1979 and now commands a 40-percent share of South Korea's coffee market, said its competitiveness has been seriously undermined by militant union activity and double-digit wage increases in the past three years.

Tetra Pack Korea, the local affiliate of the Swedish manufacturer of wrapping materials, has also paid the price for labor unrest.

"It might be difficult to increase investment in South Korea," the company said in a written answer to AFP.

"We hope that the Korean government will improve the labor environment."

Tamy Overby, executive director of the American Chamber of Commerce in Seoul, said foreign investors were drawn to China because of its huge market and to Japan because of its position as the world's second-largest economy. No such imperatives applied to South Korea.

"They will only invest in Korea if they think the labor environment is conducive to successful business. If you are looking into the media in the last few months, you will have serious questions about that," she said.

South Korea's competiveness is suffering under mounting labor costs and a lack of "labor flexibility" in companies unable to adjust their workforces based on changing business conditions, she said.

"If you ask foreign investors outside Korea what they think of the Korean market, they will probably all tell you they are worried about labor."

While avowing that perception was worse than reality -- noting that just 13 percent of Korean workers were unionized and the majority of companies free from dispute -- Overby said perception was bad enough to have a major impact on the flow of foreign investment dollars into South Korea.

"Bad news sells," she said.

"If foreign investors have growing opinions that this is a labor-unfriendly environment, they will be less likely to invest here."

The government's draft labor relations bill will make it easier for employers to lock out striking workers and to refuse pay. It also permits employers in businesses serving the public interest to hire outside workers during strikes.

"We think that's a very good step in the right direction. We hope progess is made quickly," said Overby.

After decades of military dictatorship, Korea's labor movement began its militant campaign for better wages and conditions in the late 1980s.

"Relations between management and labor unions are moving toward equilibrium after labor activism was suddenly unleashed" in a wave of pro-democracy protests in the late 1980s, said Seo Jeong-Hak, director of the government-invested Korea Trade Investment Promotion Agency.

The government-funded Korea Labor Institute's Bae Kiu-Sik said workers developed a deep mistrust of the government and managment under the military regime, which cracked down hard on unions.

"Rules have been bent and are being bent by both management and workers," Bae said.

The balance may be too-heavily tipped in labor's favor, however, Seo said.

"There is a growing public opinion here that labor unions are going too far."

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