A new partnership

The labor union at the BASF Korea Co. factory in Yeosu is notorious for its hard-line stance, but the members agreed to a wage freeze this year at the request of the management. Last year, the company recorded 130 billion won ($139.4 million) in net profit, so the union had reason to claim a wage hike, but it didn’t. It is hard to believe that this is the same union that is part of the militant Korea Confederation of Trade Unions, which launched a nine-day general strike in 2004.
BASF built a new factory in China last year and recently decided to shut down its Gunsan plant. Such decisions prompted a sense of crisis among workers, the labor union said. “Getting ready for a crisis and participating in changes are the path to joint prosperity for both the company and the labor union,” the union leader was quoted as saying.
He is absolutely right. Labor unions of Kolon, GS Caltex, LG Philips LCD and Hanil Synthetic Fiber all followed suit in freezing wages. The labor union at Kolon is famous for its militant strike that lasted 64 days; GS Caltex once had a 20-day strike.
It is encouraging to see these changes at labor unions. Our economy is in weak condition and has no capacity to endure more labor disputes. Last year, the net profits of the 541 listed companies in Korea shrank by 10 percent. According to a poll conducted by the Korea Chamber of Commerce and Industry, 53 percent of businesses polled said they did not know what their key businesses would be in three years time. Under these circumstances, labor unions that only think of themselves are a source of poisonous influence.
After the U.S.-South Korea free trade agreement goes into effect, a Japanese carmaker’s mid-size sedan produced in a U.S. factory will be able to enter the Korean market priced at 20 million won. Asking Koreans to buy Korean cars out of patriotism will not work. Unions and management must increase their efforts to produce competitive goods or the free trade accord will be a disaster. In fact, some countries have suffered hardships after opening their markets, including Argentina and Spain.
Other labor unions must pay close attention to what has happened at BASF Korea and Kolon. Unless unions see the bigger picture, a company can close, and union members must remember that. Without a company, there will be no union. The company must reciprocate a union’s cooperation by managing its affairs transparently and creatively. We need a new partnership in industrial relations to prosper in the world of free trade.