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February 1997, Volume 4, Number 2

Korea: Trainees and Strike

In October, 1996, there were an estimated 194,000 foreign workers in Korea, including 120,000 illegal overstayers, 61,000 trainees and 13,000 legally-employed foreign workers. The estimates of overstayers included 48,000 Chinese, 14,000 Filipinos and 8,500 Bangladeshis.

By comparison, in December 1992, there were 44,000 foreign workers, including an estimated 31,000 illegal overstayers, 9,400 trainees and 3,400 legally-employed foreign workers.

Foreigners who overstay their visas are subject to up to 1 million won fines and they must pay the cost of their return home. In October 1996, employer sanctions were toughened. The maximum fine was doubled from 5 to 10 million won and the maximum prison term was increased from one to three years.

In 1993, up to 10,000 foreign trainees were permitted to enter Korea to work for up to one year in small manufacturing establishments. In December 1993, the trainee quota was doubled to 20,000 and stays extended to two years.

Most of the illegal overstayers enter Korea as tourists or on short-term visas issued to persons of Korean ancestry.

Korean construction firms that build projects overseas signed contracts worth $11 billion in 1996; 70 percent of the work is in South Asia. Korean foreign aid is often granted under the condition that recipient countries use Korean firms for construction activities.

About two million Korean workers have been employed abroad since 1963.

In 1997, Koreans are less than 10 percent of the work forces of Korean construction companies who are building projects outside Korea.

Strikes. Korea was rocked by strikes in January as Korean workers and their unions protested a December 26, 1996 labor law, approved at 6 am, that would immediately permit employers to lay off workers and replace striking workers, but would not remove constraints on unions or recognize the legitimacy of the 400,000 to 500,000-member Korean Confederation of Unions as a representative of workers until the year 2000.

To protest the new labor law, the officially approved Federation of Korean Trade Unions, which has 1.2 million members, called its first general strike since it was established in 1962.

Unions were largely suppressed in Korea until 1987, when a general trend toward democracy also led to strikes as new unions attempted to organize workers. The OECD made labor market reforms a condition of Korea's joining in 1996. About 1.6 million Korean workers, 13 percent of the Korean 13 million eligible labor force, are members of 6,600 unions. About 72 percent of all union members are employed by 2,400 large establishments with 300 or more employees.

Union membership peaked at 1.9 million or 19 percent of the eligible labor force in 1989.

Korea's "miracle economy" is believed by many observers to be threatened by overregulation and rising wages. Wages have risen by an average of 15 percent a year over the past 10 years, or eight percent per year after inflation.

Korea's economy is dominated by five large conglomerates, or chaebels: Hyundai, Samsung, LG, Daewoo and Sunkyong accounted for about 60 percent of Korea's GNP in 1990. Most chaebel workers, except at Samsung which pays higher wages to keep unions out, are union members.

Workers employed by large multinationals such as Hyundai earn about $1,500 a month. Under current law, companies such as Hyundai must make large severance payments to workers whom they dismiss, and some workers fear that the new labor law will permit employers to lay off workers without making severance payments. Economic growth is expected to slow from seven percent in 1995 to six percent in 1996.

Korean employers want to legitimize "dispatched workers," those sent to the firm by a temporary employment agency.

Korea joined the International Labor Office in 1991 and the OECD in 1996.

Visa-Free Travel. Korea would like to be added to the list of 27 countries whose nationals can travel without visas to the US, but too many Koreans who apply for US visas are rejected for the US government to agree.

Countries from which less than two percent of visa applicants are rejected are generally allowed to send their citizens to the US to visit without visas; the Korean rejection rate is six to 10 percent.

North Korea. Many analysts assume that it is only a matter of time before the North Korea government collapses, prompting speculation about what would have to be done to prevent mass north-south migration after Korean unification. About 40 percent of North Korea's residents live within 100 miles of South Korea and some speculate that South Korea may keep patrolling the DMZ that separates North and South to prevent mass migration.

South Korean per capita GDP is about $10,000, at least seven times larger than that of North Korean. South Korea's labor force is 21 million and 500,000 Koreans are unemployed.

Within countries where there is freedom of movement, wage differentials of 2 to 1 do not prompt significant migration. Between countries where freedom of movement is guaranteed, wage differences of 4 or 5 to 1 do not prompt significant migration.

Analyses of east to west migration in Germany find that unemployment was the major reason to migrate, environmental concerns were second and wage differentials--the chance for someone already employed to earn a higher income--was third in importance. Home ownership, of which there is none in North Korea, was very important, for example, in keeping former East Germans from migrating to West Germany.

If South Korea were to divert funds equivalent to one-third of the cost of accelerating growth in North Korea, sending $350 billion north, it would take about 20 years to narrow the income gap to two to one. This assumes that North Korea would grow at 19 percent per year and South Korea at 3.5 percent per year.


Dean Yates, "Workers battle police in Seoul," Reuters, January 15, 1997. Michael Dorgan, "Koreans caught in a visa vise," San Jose Mercury News, January 12, 1996. Park, Young-bum. 1996. Labor Trends in the 1990s in Korea. Seoul. Korea Labor Institute. October.