All Economic Players Cooperate to Overcome Economic Crisis

With the economy plunging into a crisis, both labor and management are trying to share pain to overcome the crisis by refraining from demanding higher wages and promising job creation.

Experts say that as the current economic crisis cannot be fully addressed by temporary measures such as intervention in the foreign exchange market, each economic player should prepare for and share the pain until the economic fundamental is improved in the long run.

If labor unions go on strike ignoring the worsening economic condition, or economic players are only interested in their own good, an increase in wages will lead to inflation, amplifying and reproducing the crisis such as the first and second oil crises.

○ Workers join to share burden

LG Electronics has successfully frozen wages for two consecutive years and achieved collective wage bargaining without labor disputes for 19 consecutive years. Park Jun-soo, the then head of the company’s labor union, said, “LG Electronics is not for me alone, and not for union workers alone either. Freezing wages is to make a competitive LG Electronics for our children and our grandchildren.”

The labor union of Korean Air also declared to freeze wages to revive the company directly hit by high oil prices. It could not ignore the high fuel oil prices that jumped twofold from $83 per barrel to $162 in a year.

Among 6,745 businesses with more than 100 employees, the Labor Ministry found that a successful wage negotiation was made in 26.7 percent (1,804 businesses), which is 4.2 percent higher than the same period last year (22.5 percent), as of June 30 this year. The average rate of wage increase has dropped from 7 percent in January to 5.1 percent in June.

The Korea Employers Federation found that the percentage of businesses in which the labor commended the right of wage negotiation to the company or have successfully ended a collective wage deal without bargaining is 67.5 percent as of July 7, which nearly doubled from 37.7 percent in 2007.

The labor-management cooperation declaration under which the labor refrains from demanding higher wages without waging strikes while management promises job security has increased 170.8 percent from 431 last year to 1,167 as of July 15 this year.

○ Businesses lower prices

The refinery industry on Friday announced a joint declaration to share the burden of high oil prices to create a 100-billion-won special fund to help the marginalized class in energy, enhance energy efficiency and fund energy conservation drives.

“High oil prices are causing the marginalized to suffer, and every part of the society is discussing ways to share pain,” said the industry in the statement. “If the government, businesses and individuals combine their effort, we will definitely overcome the crisis.”

The food industry also joined the movement. Donga Flour Mill Co. said that it would lower the price of its flour products by 8-10 percent.

Roh Dong-hwan, director of the flour company, said, “Customs-cleared flour prices, which affect domestic flour prices, are going up, making it more difficult for the flour industry. But to share pain and stabilize prices, we decided to lower the price of our products.”

CJ Cheiljedang Corp. and Daehan Flour Mill Co. will also lower the price of their flour products by around 10 percent next week.

On July 3, businesses decided to push ahead with their scheduled investment plans and launch a campaign to encourage small and medium enterprises to hire one more employee per business and large companies to increase recruitment by more than 10 percent, in a statement under the name of five major economic associations including the Federation of Korean Industries.

The public sector already implemented a contingency plan to cope with high oil prices by limiting car use depending on whether the last digit of the plate number is even or odd. The Korean Government Employees Union said it was considering refraining from demanding higher wages this year to share pain.

Hyundai Research Institute Managing Director Yu Byeong-gyu said, “With the government’s consistent policy and leadership, it is important to give all economic players an impression that the fruits of sharing pain will benefit all of them.”