&#91OUTLOOK&#93Labor reform should come soon

It’s very confusing how government officials, including the president, are saying one thing about the labor unions and then another. Some officials deny that the Roh administration is pro-labor, stressing the morality and responsibilities of the labor unions and threatening to be unforgiving on illegal strikes. However, many complain that once a labor-management conflict breaks out, the government often ends up opting for a conclusion favorable to the labor unions. Some who have analyzed the problem say that President Roh Moo-hyun understands the core of the labor-management problem and knows exactly which direction to go. But, they say, the president is holding back from doing anything about these labor-management problems because of the general elections next year. Rather than offend the labor unions, a strong support base, the president will wait until after the general elections to pursue any reforms in the labor sector in earnest.
The president should know that delaying or hurrying solutions to issues according to political calculations do not always guarantee good results in the end. There are plenty of precedents in the past when the government and the people had to pay a heavy price for the short-term policies aimed at elections.
One example to do with the economy was the 1985 general elections. At the time, the economy aides of the Chun Doo Hwan government decided that it would be better to wait until the general elections were impending to brisk up the economy. Thus, they delayed the measures needed to bolster up the economy. The economy, however, did not dance to their tune and the economic recession continued into the election day. With the public already hostile to the authoritarian government, the government’s failure to manage the economy resulted in the crushing defeat of the government party in the general elections.
The Kim Dae-jung administration, on the other hand, boosted the economy too early on with the presidential election in mind. When the growth rate started falling at the end of 2000, the government tried to encourage household consumption to awaken the real estate market. It turned a blind eye to the overissue of credit cards and the abrupt rise of household loans. As a result, the growth rate rocketed from 1.9 percent in the third quarter of 2001 to 6.4 percent in the second quarter of 2002. With the presidential election around the corner, the growth rate for the third quarter of that year announced in November was 5.8 percent. In that this economic boom contributed to Roh Moo-hyun’s victory, the government succeeded in achieving its purpose. This, however, brought serious side effects in the economy. The sudden increase in household debts began to exert pressure on consumption and individual credit delinquents were created. When the economy cooled down suddenly, people began to speculate in real estate all over the country. The new government is still trying to clean up after this mess. As much as the manipulated economic boom, the deliberate delay of labor reforms with the elections in mind could have serious consequences on the economy. The drastic and illegal actions of certain labor unions and the government’s lukewarm reaction to them made foreign investors nervous and discouraged the production and investment activities of domestic businesses. The government should not put off urgently needed labor reforms until after the general elections. The labor reforms are not asking much, the core of the reforms being that the labor unions act in accordance to the law and principles. It might not be an easy thing to do, but the president must censure the labor unions, his support base, for any drastic actions and convince them that labor reforms are indispensable for long-term national interests and the welfare of the laborers.

* The writer is the director of the JoongAng Ilbo Economic Research Institute.

by Ro Sung-tae