Restructuring as Now Planned Will Fail

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Restructuring as Now Planned Will Fail

"Win-win game" is a popular buzzword these days. Some forms of transactions, such as freely agreed exchanges, can often produce results that benefit all the involved parties, but most economic issues produce conflicts of interest.

There is no chance of playing a win-win game in restructuring failed firms if the objective is to make sure that no one loses money. Astonishingly, the misguided notion that a win-win strategy is possible in restructuring is spreading in Korea because of faulty calculations, delusions and deception. Such games usually wind up with outsiders as victims, not winners. The helpless victim is unfailingly the general public, otherwise called customers, shareholders or taxpayers.

The notion of job sharing, proposed as a solution for unemployment, is also deceptive. When unemployment soared after the reunification of the two Germanies, the labor unions in the former West Germany came up with a seemingly ingenious idea: reducing unemployment by cutting down weekly working hours and allocating the extra hours of work to the jobless. Since the proposal came with a condition of paying the same weekly wages for the shorter working hours, existing employees welcomed it as enthusiastically as the jobless. So did it prove to be a win-win game? All it managed to do was to place a greater burden on the people by pushing up costs, raising prices and weakening German product''s international competitiveness. Despite this lesson, it seems Korea will soon try this European-style expedient.

It also seems the government is going to stall reforms by deluding itself that it can play a win-win game in the financial sector, which is waiting to be given more than 40 trillion won ($33 billion) in public funds after having already soaked up 110 trillion won. The committee evaluating banks'' management teams recently proposed that six ailing banks should aim for operating profits per employee of 220 million won by the end of 2001, which the banks'' labor unions protested was too high. But it is a shamefully low goal, since the proposed figure is based on a breathtakingly broad definition of operating profits. If a bank cannot earn even that much per employee under such a definition, it should be liquidated and the public funds used for more worthwhile causes. The managers of these sick banks also fail to motivate and drive their employees to work harder. Could it be because they fear the labor unions? Restructuring that exempts management from assuming any responsibility and allows union members to keep their jobs despite low productivity is a sham.

Some cynics doubted the government''s will in its restructuring efforts because there were always suspicions of secret deals in labor-management disputes in which the government intervened. An incident that turned the majority of the people into cynics took place a few days ago. A document was discovered which pointed to a covert deal between the Korea Electric Power Corporation and labor leaders on wage hikes and greater welfare benefits for the workers in order to avert a general strike. The company denied signing such a document, but it seemed enough of a clue to the puzzle of the previously militant labor union''s sudden retreat. The people living in this information age are not easily duped; they can guess the rest of the story from just a single clue.

Such deceptions are being committed in the name of restructuring today. Among public enterprises, only the Korea Minting and Security Printing Corporation saw a sharp improvement in this year''s balance sheet. Ironically, its union went on an illegal strike last year, accusing the mint''s former CEO for pushing ahead too vigorously with corporate restructuring. The other state-invested enterprises are only going through the motions of restructuring.

It is a shame to use the term "restructuring" to mean something that only benefits the government officials appointed to run state-owned corporations and employees who win raises by threatening their new bosses with strikes. There are more appropriate terms that can be used for hoodwinking the public through mismanagement and ballooning deficits.

"If you once forfeit the confidence of your fellow citizens, you can never regain their respect and esteem. It is true that you may fool all of the people some of the time; you can even fool some of the people all of the time; but you can''t fool all of the people all of the time," U.S. President Abraham Lincoln once said. It is doubtful that any leader in Korea under-

stands its significance.

Rumors of political involvement abound each time a financial scandal is uncovered. Judicial and financial order, a basic requisite of an economic society, is collapsing. Economic crises stem from the fraud, rampant among those in charge of the economy. Could the government be giving fraud a free rein or even aiding it? We have to revive the economy at all costs, but it cannot be done with the current form of restructuring. The government is only now entering the crucial phase of restructuring, which is to make the labor market more flexible.

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