Group urges end to labor hostilityA day after shipbuilding and car industry unions announced plans for a strike and called on management to reform chaebol groups, a federation representing local businesses said it isn’t the right time to arouse hostility against conglomerates.
On Thursday, the Federation of Korean Industries (FKI) released a report titled “The nation’s current economic crisis and misunderstandings on chaebol” which contradicted some of the unions’ positions.
“The nations top 30 groups are trying to create more jobs and to expand investments though the overall economy is getting worse every day,” said Song Won-keun, head of the economic research division at FKI. “Both the government and the labor circle should stop wasting their time arguing about such issues and focus on revitalizing the economy to create more jobs.”
The unions said on Wednesday they would strike as the offer made by companies in this year’s wage negotiations - some of which freeze this year’s salary - is unreasonable because recent financial hardships on companies are caused by poor business decisions made by chaebol and executives.
The unions said the companies need to reform their management structures and take responsibility for bad decisions instead of imposing burdens on workers. The unions also urged companies to use their trillion won cash reserves, the money they earned when the industries were booming, to pay workers.
Regarding companies’ poor profits, the FKI said, “The nation’s economy remarkably grew from the 1980s to 1990s, by an average of 9 percent per year, but the figure collapsed to 2 to 3 percent after 2011, which is even below the world’s average. The nation’s exports have been consistently decreasing in the past eight months and are at a very serious situation that is similar to the level in the 2008 global financial crisis.”
According to the report, the number of insolvent companies under the supervision of the state-run Korea Development Bank grew from 78 in 2010 to 115 in 2014, but economic conditions might be even worse in the future due to China’s economic crisis and a likely interest rate rise in the United States.
Regarding the reserve cash, the FKI said, “As of last year, the total reserves by the nation’s top 30 conglomerates were 683 trillion won [$573 billion], but only 118 trillion won of them are cashable assets. Labor claimed that companies have 710 trillion won in reserves and must impose taxes on this money, but this is wrong.”
The FKI said the ratio of total assets to cashable assets by listed companies excluding financial institutions was only 9.3 percent as of 2012, much lower than the G8 nations (22.2 percent) and European Union (14.8 percent).
On the unions’ opinion that the country needs to provide a legal system that forces companies to hire a certain amount of college graduates every year, the FKI said the proposal would cause problems for small to mid-size enterprises already having difficulty attracting competitive workers since 81 percent of college students prefer getting jobs at major conglomerates and public institutions.
On the chaebol reform issue, the FKI said the governance system in major companies has improved since circular shareholdings have been decreasing, from 97,658 cases in April 2013 to 459 in April this year, and internal businesses between companies and their affiliates are also decreasing.
BY KWON SANG-SOO [firstname.lastname@example.org]
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