South Korea Sputtering Back to Life

"Mansei! Mansei! Mansei!"

Facing a crowd of labor negotiators last week, Chung Ju Yung shouted the traditional Korean cheer for long life. Mansei! was an appropriate chant for the farm boy turned industrialist. He had just agreed to a settlement that would spark his $14 billion-a-year Hyundai Group back to life.

Plagued by the same labor disputes that have crippled the South Korean economy over the past month, Chung had refused to meet with his employees' newly formed unions and promptly shut down seven of his conglomerate's 24 companies. Among the shuttered enterprises: Hyundai Shipbuilding & Heavy Industries, with 24,000 workers, and Hyundai Motor, with 23,000. More than 60,000 employees in the southeastern city of Ulsan were locked out. Trying to rally near one factory, 20,000 workers clashed with riot police. A day later, 40,000 strikers and supporters staged a twelve-hour demonstration in and around Ulsan. Wearing white safety helmets and their blue company uniforms, the demonstrators flooded into the municipal stadium after a six-mile march. It was the biggest single labor protest in the nation's history.

Fearing further escalation, the government dispatched a negotiator to meet with Chung and union leaders. It marked the first time that Seoul has intervened since the wave of strikes began in July. After a session of several hours, Chung agreed to recognize the new unions, promised to conclude wage talks by Sept. 1 and reopened his plants. In Seoul, teary-eyed labor representatives toasted their boss with beer and serenaded him with the company song.

Since the regime of President Chun Doo Hwan acquiesced to far-ranging democratic reforms in June, labor activists have organized strikes at hundreds of companies. Their aim: to win better pay and form unions that are independent of the workers' federations, which follow the management line. The government has been surprisingly supportive of the new unions' demands, even though strikes are still technically illegal. "Recent demands by laborers must in principle be accommodated," declared Chun.

The prospect of the country's second largest conglomerate's shutting down indefinitely stirred Seoul into direct action. Hyundai produces the Excel, a subcompact popular in the U.S. and one of the most potent symbols of South Korea's economic coming of age. Though Chung denies that he caved in to government pressure, he admits that his initial refusal to negotiate was wrongheaded. "I thought they ((the union leaders)) were too young and inexperienced with company affairs to represent all the workers," says the 71-year-old Chung. "After I met with them personally, I found out I had been wrong."

While the government has earned praise for ending the Hyundai crises peacefully, it is wary of mediating again -- especially if that leads to financial bailouts. "The less of it, the better for everybody," says Suh Sang Mok of the Korea Development Institute, a government think tank. Intervening in remaining disputes may also be logistically impossible. At one point last week, the Labor Ministry reported that 485 companies were plagued by labor strife.