Date: Sat, 27 Jul 1996 17:43:45 GMT
Sender: Activists Mailing List <ACTIV-L@MIZZOU1.MISSOURI.EDU>
Subject: Labor Complaints Could Prompt International Strife for Korea
/** 304.0 **/
** Topic: S.Korean Bosses Hated World-Wide **
** Written 10:11 PM Jul 20, 1996 by labornews in **
From: Institute for Global Communications <>

Labor Complaints Could Prompt International Strife for Korea

By Wall Street Journal reporters Dan Biers in Kuala Lumpur and Matthew Rose in London and Michael Schumann and Namju Cho in Seoul, 20 July 1996

The television sets assembled at Sejen Electronics Co.'s plant in Zhuhai, China, are black-and-white, and so are the factory's rules.

Talking, unless work-related, is prohibited on the production line of the South Korean-owned plant; three violations lead to dismissal. Going to the restrooms at any time other than the 10-minute break once every two hours also is forbidden except for emergencies, and then a supervisor's permission is required.

But what really gained local notoriety for Sejen was an incident last year in which Kim Jin Sun, the Korean who runs the plant, ordered more than 100 workers to kneel down before her as punishment after she spotted a few nodding off during a break. The employees were mortified, and the local press was indignant that Chinese were again being humiliated by foreigners.

Not only in Zhuhai but at many plants around the world, some South Korean bosses are developing a reputation for harsh and sometimes abusive treatment of labor. Accusations -- ranging from overwork and union-busting to demeaning treatment and physical abuse -- come from Latin American textile plants, Pakistani construction sites, Chinese and European electronics factories and elsewhere.

For now, South Korean investment abroad remains welcome for creating thousands of jobs, often in impoverished regions. The complaints, while disturbingly frequent, affect only a minority of Korean investments overseas. And there are signs that some Korean businesses -- particularly the huge conglomerates known as chaebols -- want to improve their image overseas by fostering better relations with workers. If labor complaints persist, however, the welcome mat may fray, compromising South Korea's access to cheaper foreign labor and new markets.

Even Seoul's application to join the Organization for Economic Cooperation and Development -- the rich nations' club -- could be jeopardized, says John Evans, general secretary of the Trade Union Advisory Committee to the OECD. His committee is one of two groups that will make recommendations to the OECD on admitting South Korea as a member. OECD officials have made it clear that South Korea's progress on implementing labor reform will be a key issue in the decision, which is expected in September.

Mr. Evans says the OECD has been concerned about complaints of labor abuse by South Korean companies in several countries and considers the matter serious. "We are picking up a strong feeling that a lot of Korean companies with international operations are basically doing all the wrong things when it comes to operating as good corporate citizens," he says.

In Vietnam, for example, South Korean companies accounted for 40 of the 79 reported strikes and labor disputes at enterprises with foreign investment from 1990 to April, according to the Ministry of Labor. That doesn't mean, of course, that all Korean investors get into trouble. Phan Duc Binh, a senior ministry official, is quick to point out that most Korean employers don't abuse their staff.

And businesspeople from many other countries have been the targets of criticism around the world at one time or other. In earlier eras, there was the ugly American, followed by the ugly Japanese. Even today, there are ugly Taiwanese as well as ugly Koreans.

"In almost every part of the world, two groups of investors are causing enormous problems for workers," says Neil Kearney, the Brussels-based general secretary of the International Textile Garment & Leather Workers' Federation. South Korean and Taiwanese companies, he says, "are regarded by the workers as totally brutal."

Indeed, Mr. Kearney says the complaints about South Korean and Taiwanese factories that he receives outnumber all the rest by at least a 4-to-1 ratio. He hears many of the allegations first-hand during his extensive world travels and says they tend to be similar: screaming and shouting at employees to work faster; beatings with fists or knotted pieces of fabric; severe restrictions on the number of visits to or the amount of time spent in toilets.

Perhaps these similarities stem from experiences shared in Taiwan and South Korea. Both are newly industrializing economies that have earned global admiration for developing with amazing speed the past two decades. But rapidly rising wages at home have forced many of their companies to scurry abroad these past few years in search of cheaper labor.

In many cases, their businesspeople have tried to transplant overseas the rough-and-tumble approach to labor relations used at home. This includes an earlier resistance to unions -- to this day, Samsung, South Korea's largest conglomerate, doesn't permit any independent union activity -- and strict, militaristic discipline at their factories. Often, labor activists say, ex-soldiers are recruited to supervise workers.

But while Taiwanese overseas investment has centered largely on nearby China, which shares the same culture and language, and Southeast Asia, South Korean investment is taking on a truly global flavor, in part because of forays abroad by the country's chaebols. Korean investment overseas jumped from $1 billion in 1993 to $2.75 billion last year; just this month, the LG Group announced a $2.63 billion project to build two factories -- one making monitors and picture tubes and the other a chip plant -- in Wales.

In Britain overall, Samsung alone has invested more than $730 million in factories that build everything from televisions to earth excavators. All told, some 20 South Korean companies employ nearly 10,000 people, and the British government welcomes the investment.

But such investment has stirred controversy in Britain and elsewhere in Europe. Union activists cite many instances of alleged worker mistreatment at some plants, and say they run into stiff company opposition when trying to organize workers. South Korean companies want "a hard day's work for a day's pay," says Mark Tarmi, head of research for the Amalgamated Engineering and Electrical Union in Britain. "When they are not getting that, some individuals may take an unacceptably tough line with people."

In northern England, home to several South Korean factories, Stella Guy, regional coordinator for the Transport and General Workers Union in the Northeast, says: "They don't see trade unions as being part of their culture. The door was not slammed in our face and the people have been very courteous, but they have not perceived a need to deal with us."

In lesser-developed countries, more serious charges, such as violence against workers, are raised. In a case involving a Daewoo Corp. road-construction project in Pakistan, a senior committee of the International Labor Organization upheld union complaints that fundamental rights to free association, to form a union and to strike -- agreed to by Pakistan and other ILO members -- had been violated. The ILO, which is a branch of the United Nations, also asked the Pakistani government to investigate all "serious allegations" of torture and false imprisonment of workers on the project.

According to the Geneva-based International Federation of Building and Woodworkers, disputes arose between members of the unrecognized Awami Labor Union trying to organize workers on the project, a 351-kilometer highway between Islamabad and Lahore, and Daewoo management. The union said wages were too low and complained about the lack of benefits.

Daewoo, on the other hand, says efforts to organize workers were led by outside activists trying to disrupt the project. The company says it pays better than other companies doing comparable projects in Pakistan, with an average wage of $1,800 a year, and that its employees receive benefits, including workers compensation insurance and free meals.

On Jan. 26, 1993, a Daewoo official sent a letter to police listing all union members working on the project, the IFBWW says. The next day, 32 unionists were arrested and held without charge. Valuables were taken and never returned. After Pakistani labor groups finally located the detainees, only 14 were released; the others were sent to a lunatic asylum, according to the IFBWW.

The IFBWW says allegations of police torture were made by the released workers in statements to the All Pakistani Federation of Labor. They said the police offered them bribes to withdraw from the union. When they refused, they were given electric shocks, were forced to sit naked on blocks of ice and had chili powder forced into their mouths, according to the union.

Daewoo, in a statement to The Asian Wall Street Journal, denies cooperating with local authorities to have union members arrested. When presented a copy of the alleged correspondence, Daewoo headquarters in Seoul responded that the letter was sent by a Pakistani employee without the knowledge of his Korean managers. It said action will be taken against the employee.

"Only those involved in criminal acts trying to disturb the peace and tranquillity of the worksite may have been apprehended by the local administration," the statement says. Meanwhile, Gamran Shafi, a spokesman at the Pakistani High Commission in London, denies that Pakistani security forces falsely imprisoned and tortured Daewoo workers.

The Awami Labor Union finally received government recognition in April, after the arrest of 205 union members and the firing of almost 400 highway workers since 1992, the IFBWW says. Daewoo, which denies making any unwarranted dismissals, is challenging the registration.

Despite the complaints about chaebols, it's the smaller Korean companies that are the target of most allegations, says Lee Dong Eung, director of the international division of the Korea Employers' Federation in Seoul.

It is at these less sophisticated companies, such as Sejen Electronics, the television-maker found several flights up an aging factory building in Zhuhai, that the clash of cultures between Korean management and their foreign workers really comes into focus.

Mrs. Kim, the Sejen factory boss, to this day defends last year's kneeling incident. "It was the best way to make them understand that they had done wrong," she says. "Kneeling down in Korea isn't considered as shameful as in China. I didn't mean to demean them as human beings. It was just a management strategy I had to resort to."

She adds: "I don't feel I'm feared by my workers. Workers come in and out of my office all the time. Would they do this if they were intimidated by me?"

But listen to some of her young women workers, recently arrived from nearby inland provinces. "That boss is really scary, she really is uncivilized," says one. "She's like a lion," says another. "She scares us so bad. I don't want to work." All asked that their names not be used for fear of reprisals.

Complaints range from working conditions to dormitories, which are several sparse apartments on the fifth- and sixth-floors of a run-down, gray concrete building. Outside, broken glass litters the approaches; inside, each apartment houses up to 17 workers whose only privacy is provided by the thin cloth curtains that surround their beds.

Workers said several employees want to leave Sejen but were afraid of losing unpaid back wages and the 200 yuan ($24) deposit paid to the company upon employment. One woman from Sichuan province who has worked at the factory for more than two years said in mid-June she hadn't been paid since April.

Mrs. Kim didn't answer several requests for a response to the allegations of unpaid back wages. She did say, however, that basic monthly pay is 380 yuan, with up to five hours of overtime daily that earns time and a half. She says Sejen employees don't get their first paycheck until 25 days on the job; anyone who quits during that initial period gets nothing.

A 20-year-old from an adjacent province, a sad smile creasing her round face, says, "I've worked here for two-and-a-half months and still haven't received my wages." Would she like to leave? "Of course I've thought about going home. I think about it every minute."

Similar complaints emerge around the globe.

In Vietnam, the official media has reported several allegations of ill-treatment, including one in which a young Korean supervisor had to apologize after she hit 15 employees, prompting a strike. Mr. Binh, the Ministry of Labor official, says most disputes are over low wages, long working hours and poor working conditions.

In Argentina, Koreans have become the primary owners of small textile factories, which normally operate underground and pay neither taxes nor social security for their workers. Most recruit day laborers, paying $3 per double shift and a cot.

Two Korean businessmen were arrested in January after a raid by police on their clandestine textile factory in a Buenos Aires warehouse. Lawmen found a loft strewn with mattresses and beds where illegal Bolivian women immigrants were kept in what local prosecutors described as "involuntary servitude," receiving only small portions of rice and tea daily and a monthly payment of $250.

Another Korean businessman was arrested in Argentina three years ago on charges of reducing to servitude 10 Brazilian minors who were prevented from leaving his textile shop under threats of physical violence, according to local media reports.

In the U.S., South Korean businesspeople, many of them immigrants, also own most of the garment contractors in the Los Angeles region, where a recent survey indicated that wage, overtime and occupational safety violations are commonplace, according to a U.S. Department of Labor official.

A survey earlier this year of 76 firms conducted by several government groups found 43% in violation of minimum wage laws and 55% in violation of overtime rules. Serious health and safety violations were found at nearly three-fourths of the companies.

"More than half of the sewing contractors in Los Angeles are Koreans," said a department official, who spoke on condition of anonymity. "This study is an accurate reflection of that community."

The situation appears much the same in New York City's garment industry, which has about 400 Korean-owned sewing subcontractors, says Jeff Hermanson, director of organizing at the Union of Needletrade Industrial and Textile Employees. Standard practice at many of those operations is to have employees, typically Chinese or Hispanic immigrants, work 55 hours or more a week without paying overtime, he says.

Mr. Kearney, the textile union official, says the number of complaints are growing world-wide. Now, finally, the Koreans seem to be responding.

At the prodding of the Northern Development Corp., an alliance of trade unions, employers and local government set up to bring investment to northern England, two South Korean companies, Inkel Corp. and LG Electronics Inc., have hired British on-site managers.

In February, the Council of Korean Economic Organizations, which is composed of five South Korean business groups, adopted a code of conduct for overseas investments. The 10-point code urges:

"We wouldn't have written the code of conduct if everything had gone well," says Mr. Lee, the Korea Employers' Federation official. He says copies of the nonbinding code have been forwarded to South Korean embassies, which are expected to offer proposals for seminars and other projects to establish better labor-management relations.

"We think this is the right move," says Leung Po Lam, director of the Hong Kong-based Asia Monitor Resource Center, a regional labor activist group. "Whether this is lip service or they really mean to do it" remains to be seen, he says.

Some analysts have been noting some improvement already. "Five years ago, the ugly Korean was more the reputation. They're shedding that image now," says Robert Broadfoot, a Hong Kong-based risk consultant who advises U.S. and other companies on investment in Asia. "I think the chaebols are learning."

In a new industrial zone on the outskirts of Huizhou, one of the boomtowns that blanket Guangdong province in southern China, sits a modern factory making audio equipment for LG Electronics. In addition to the traditional slogans exhorting hard work -- Chinese characters reading "Do Today's Work Today, Don't Delay" adorn one factory wall -- the company has posted a corporate policy at the main entrance demanding that people be treated with respect.

Young women with white scarves over their heads work the spacious plant, outfitted with everything from water coolers by the assembly line to a battery of fire extinguishers along the walls. Next door is the company canteen, where workers can watch TV in air-conditioned comfort as they eat meals served for a nominal fee.

"The work environment is pretty good," says Miss Yun from nearby Jiangxi province. "They respect workers."

That may be because LG Electronics has a different strategy than the smaller South Korean companies that use China as a low-cost export platform to make quick profits. "We're not here for the short term," explains M.J. Ahn, the plant's 41-year-old managing director. Indeed, LG is putting up plants throughout the country with an eye on the huge domestic market.

Mr. Ahn clearly is proud of the amenities afforded his work force. Pop music can be heard from the company dormitory that surrounds a pleasant courtyard; most of the 700 employees sleep here for free, with up to eight in a room. During off hours, workers can visit the company activity center to play table tennis, read magazines and newspapers from a small library, sing karaoke, or hang out with friends at an outdoor lounge, where three tables and chairs are arranged on frayed Astroturf.

Although Mr. Ahn says company policy allows workers to organize, there is no union in Huizhou and LG Group's relations with activists back home aren't always smooth. The conglomerate says it has yet to rehire several employees in South Korea fired for union activity since the late 1980s.

Huizhou LG Electronics purposefully refuses to hire more than several dozen workers from any one region to ensure employees' supreme dedication is to the company, a practice Mr. Ahn says is common among foreign-owned factories. After all, he says, it could be a "serious problem" if workers placed their local ties to one another before the company.

For now, though, Mr. Ahn says he couldn't be happier with his employees, whose productivity is better than expected. His assessment: "Chinese workers are very excellent."