Labor Union Bosses Management Around

"We asked for the police protection against the illegal labor activities like beating, blockade. But the police closed their eyes. The court would not enforce the law, either. That is why they keep repeating the bad behavior." (European company, whose initial is A.)

"The labor has crossed the line already. How could they tell us to hire their men, and adjust production upon their demand?" (Another European company)

These are the examples of the complaints filed by foreign-invested companies with the Federation of Korean Industries.

Upon Roh Moo-hyun`s taking office, labor strikes have mushroomed. Amid this trend, foreign-invested companies are also suffering.

The Federation recently conducted a poll, where 76 major foreign companies from the Untied States, Europe and Japan participated, on ways to improve the investment environment in Korea. According to the results published yesterday by the Federation, a majority of foreign-invested companies selected the labor dispute as the factor that hindered foreign investment most. Then, followed were lack of transparency in government policies, high labor cost and regulations.

When asked whether the environment has improved for the past two to three years, 52.2% of the respondents said yes, while 39.5% said negatively. Even 7.9% replied that it has got worsened. Only 13.1% of the companies gave positive remarks on the labor cost. Likewise, 25.0% said the same as to the taxation, and 36.9% as to the labor-management relationship.

23.7% of the companies asked the South Korean government to do something to improve the conditions, but only 15.7% of them received positive responses. Only 16.6% of the respondents said the environment improved. Even a foreign-invested company said it was discriminated.

The foreign companies point out that bureaucracy, xenophobic behavior of Koreans and red tape hindered the improvement efforts most.

40.8% of the respondents said Korea is a better place to invest than China purely in terms of the business environment. An equal number of respondents, however, favored China. Considering higher wage and the level of technology level, 82.9% of the respondents favored China.

They cherished the potential of the market most in making the investment decision (78.9%), followed by production cost and return on investment (67.1%) and labor relationship (57.9%).

Overall, 6.6% of them plan to close their Korean subsidiaries, while 10% in the manufacturing industry answered the same. The labor union affected the decision most (36.7%), and production cost (26.7%).

Yeon-Su Shin ysshin@donga.com