[EDITORIALS]Halting the flight of firms

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[EDITORIALS]Halting the flight of firms

Lee Soo-young, chairman of the Korea Employers Federation, warned during a press conference two days ago that the nation’s companies could “go on strike” if current labor-related legislations lean in favor of labor unions. But the “strike” he meant, unlike any other typical street demonstration, was that local companies could simply close their businesses here and leave.
But that kind of strike is already happening. Domestic companies made 4,365 direct overseas investments which amounted to $6.4 billion, meaning investments that could have been made within the nation were instead made in foreign countries. In particular, the companies that go overseas are usually those that create a lot of jobs. While the nation’s unemployed workers cry out for jobs, the companies that could actually hire them are fleeing this country.
Certainly, the unstable labor-management relation is not the sole reason those companies are heading overseas. Many of them also leave here to explore new markets and to find alternative production bases with lower wages than the going rate here. But the problem is that local companies that already have tons of reasons to flee this country will not even hesitate to leave once they face too many demands from labor unions and intense labor-management disputes.
What the Korea Employers Federation took issue over is the legislation aimed at protecting temporary workers. If the legislation takes effect as planned, local companies will face an additional 43 trillion won ($43 billion) in financial costs a year, including 40 trillion won imposed on small and medium-sized companies. Few firms could withstand such pressure. The result would be a drastic job reduction. The good intention of protecting temporary workers will result in taking more jobs away, which is why labor unions should refrain from making too many demands.
Even Kim Dae-hwan, the labor minister who stepped down yesterday, said the labor unions also should reform themselves, stressing the need to revamp unreasonable labor relations. We can understand Mr. Lee’s position but his rhetoric seemed to be too strong.

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