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South Korea

THE LABOR FORCE

Despite significant increases in wages in the 1980s, labor unions in the late 1980s continued their wave of strikes demanding better working conditions and wages. The ferocity and sheer size of the labor movement caught management and the government by surprise. During his first year or so in office, President Roh Tae Woo was confronted with considerable labor unrest; there were more than 300 strikes in the first three months of 1989 (see Interest Groups , ch. 4). Emboldened by the political reforms of 1987 and by reports that the rate of South Korea's economic growth was greater than the improvements in their own incomes and life-styles, many workers agitated for a greater share of the nation's prosperity and sought more freedom and responsibility at the workplace and an end to the traditional paternalism of management. Lost production was estimated to have climbed to US$6 billion in 1989 from US$4.4 billion in 1988.

Workers were caught in a revolution of rising expectations, as a wave of rising urban land values and housing costs outpaced average real wage increases of more than 70 percent during the 1980s. Moreover, wages for manual workers, who were responsible for much of the production and export that fueled the economy, were much lower than the national average. In the late 1980s, working families still found themselves struggling to meet minimum standards of living. Employees also were expected to work long and often erratic hours in exchange for steady employment and were frustrated over a lack of benefits and individual say. One labor activist noted in 1989 that the labor movement "is not a class struggle. We just want better working conditions and better status for workers. We have been looked down on in Korea for a very long time."

Worker complaints were focused on three areas: low wages, long working hours, and a high number of industrial accidents. In 1986 the average wage of a South Korean worker was US$381 a month (339,474 won), including overtime and all allowances. The basic wage was US$287, or 255,408 won, but, according to the government, the basic wage necessary to sustain a "decent" way of life was US$588 (524,113 won). Thus, the average worker only earned two-thirds of what the government thought necessary to sustain a family of four. In 1987 semiskilled workers typically received US$1.50 to US$2.00 per hour and worked fifty-five to sixty hours a week; unskilled workers worked twelve-hour days seven days a week, earning US$125 a month.

There were, however, dramatic increases in wages in 1988 and 1989. Labor stoppages in the manufacturing sector, coupled with a scarcity of labor, led to 20-percent salary increases for workers in the manufacturing sector in 1988 and 25-percent salary increases in that sector in 1989. These raises later spread, increasing wages across the entire economy 18.7 percent in 1989. By 1989 some South Korean economists were worrying about the effect that skyrocketing wages would have on the cost of domestic-made goods and the consequent impact on export prices. The situation was was especially worrisome because the wages paid to workers in South Korea's major competitors were growing far more slowly.

South Korea was known for having the world's longest working hours. In 1986 the Korean worker averaged about 54.7 hours a week. This situation was the natural consequence of the low wage system that necessitated extended hours and extra work to earn minimum living expenses.

Data as of June 1990