SEOUL, South Korea (Reuter) - Striking workers closed South Korea's leading carmakers and several huge shipyards, crippling key export industries in a union backlash against the surprise passage of a new labor law on Thursday.
An outlawed labor union organization immediately called out half a million workers on an indefinite strike in protest at the law that allows layoffs and flexible working hours.
The ruling New Korea Party adopted the legislation at a dawn session of parliament with no opposition deputies present after opposition parties had blocked previous attempts to ram it through.
Leaders of the country's largest and more moderate union umbrella group instructed 1.2 million workers at affiliates in 800 companies to lay down tools on Saturday, a half-day for most Korean workers.
A decision on how long to extend the stoppage would be taken on Friday, according to officials at the Federation of Korean Trade Unions. They said transport workers would be excluded from the industrial action.
"Workers have nothing to lose any more," said Namuh Rhee, the head of research at Dongbang Peregrine Securities. "I see a series of massive strikes in the first quarter of 1997.
"But later on, the government will get support of the public, because when Koreans feel they are in crisis they tend to rally around the government."
The National Assembly passed the labor law along with another controversial bill strengthening the powers of the once-notorious domestic intelligence agency.
New Korea Party chairman Lee Hong-koo said adoption of the hotly debated bills was "regrettable but inevitable."
The party has an absolute majority in the National Assembly, but generally seeks compromise with opposition groups on its legislative agenda.
"The people will decide which side was right next year," Lee said, referring to presidential elections next December.
The outlawed Korea Confederation of Trade Unions on Thursday ordered work stoppages at 300 companies it controls.
"We have called an immediate and indefinite strike," said union official Yoon Young-mo.
Workers at Hyundai Motor, Kia Motors and Ssangyong Motor responded quickly, halting production lines.
Shipyard workers at Hyundai Heavy, Hyundai Mipo Dockyards, Halla Heavy Industries and Hanjin Heavy Industries also walked off the job.
A union official at the main shipyard of Daewoo Heavy Industries said workers there had decided to go on strike from 8 a.m. on Friday (6 p.m. Thursday).
Vehicles and ships are two of South Korea's biggest export products and have underpinned the country's economic rise as an Asian "tiger" economy.
The stock market dived and economists warned of the short-term damage to the economy, already shaky because of an export slowdown. But analysts said the labor law would benefit the economy in the long term by allowing employers to cut costs and increase their competitiveness.
"The strikes will lead to production losses, export losses and a deterioration of the current account deficit," said Tae Chung, a strategist at Jardine Fleming Securities.
The main opposition National Congress for New Politics condemned the shock tactics of President Kim Young-sam's ruling party and said it would join hands with the minor United Liberal Democrats to fight the legislation.
"We define the New Korea Party's sneaky passage of the legislation as a 'Kim Young-sam coup'," the National Congress said in a statement.
"We will launch an all-out struggle together with the United Liberal Democrats to nullify and frustrate this 'Kim Young-sam coup'."
A statement by the Hyundai Group union described the adoption of the labor law as "a barbarous act that ridicules and tramples on the people's request for reform."
The law giving wider powers to the National Security Planning Agency has been attacked by the opposition as a ploy by Kim to crack down on his foes ahead of next December's vote. Kim cannot run for a second term but will anoint a successor.
South Korea's version of the U.S. Central Intelligence Agency (CIA) was stripped of many of its investigative powers by Kim under an election pledge to curb the agency that once hounded dissidents during military-backed rule.
The ruling party insists the agency must be given sharper teeth to combat a renewed threat of subversion from Pyongyang.
A statement from the prime minister's office said on Thursday said South Korea will take "stern countermeasures" against illegal strikes.
It gave no details of steps to be taken against union bodies that have issued strike calls to almost 2 million workers in protest at the passage of the new labor law.