Despatches

By Andrew Wood, BBC (Seoul), Saturday 14 February 1998: 18:30 GMT

South Korea’s Parliament has passed a controversial package of law to give businesses more freedom to make redundancies. The reforms were required by the International Monetary Fund before it would make nearly $60 billion of emergency loans to help the country out of its economic problems. Andrew Wood reports from the South Korean capital, Seoul.

The laws have taken two weeks to pass through the National Assembly. It has been a stormy time, and the fact they’ve been passed at all is an important achievement for president-elect Kim Dae Jung.

He won the elections in December, but does not formally take power until February 25th. Unions have blown hot and cold over the new legislation, which will help to kill off Korea’s jobs-for-life culture.

Some estimates say there’ll be up to 1.5 million new unemployed people as a result. Just over a week ago, unions, business and the government concluded an historic agreement which would make it easier for South Korea’s troubled and overstaffed businesses to make redundancies in return for more political freedom for unions and better benefits for the jobless.

Then there was, in effect, a coup at one of the signatory organisations, the militant Korean Confederation of Trade Unions. The new leadership threatened a general strike unless the deal was re-negotiated.

However, it cancelled the strike less than 12 hours before it started, because it thought the effect on international confidence in the economy would be too bad. These latest laws were passed too late to affect the Seoul stock market.

Shares fell during the Saturday morning trading session by more than 4%, ending a week of significant falls.