The Implication of Trade Liberalization on Korean Women Workers

The Implication of Trade Liberalization on Korean Women Workers
Jin-young Park

1. Transformation of Korean Economic Situation

In Korea, capitalistic economic development was started in earnest from the 1960s. President Park who came into power by military coup wanted to get the popular support through rapid economic growth. In order to realize this, he needed to get more foreign private capital inflows and to solve the interest problems that he adopted. As the slogan "Export is the only way to survive" emphasized, the economic development policy of Korea has mainly depended on export. The situation of the world economy enabled the Korean government to set these strategies. Many developed countries, including the US, were beginning to face an economic depression after enjoying the post-war economic boom. It felt the need to export their low-profit making and labor-intensive industries to developing countries in search of cheap labor to reduce the costs of production and to maximize their profits.

During this period, the American, Japanese and other multinational companies earned huge profits from their investments in Korea. Labor was cheap and little was spent on the welfare of the workers who worked long hours. Such exploitation was possible under the direct scrutiny and support of the South Korean government. Basic labor laws became non-existent and in 1970, a special law was passed preventing the formation of unions and union activity in foreign companies. Due to the characteristics of light industries, women occupied the majority of the work force. Women received less pay and faced more discrimination.

Industrial restructuring also took place in the 1980s led by the government and the financial sector. Until the 1970s, South Korea experienced rapid economic growth through the exports of low-priced mass-produced products with the help of low pay and long working hours (Lee Jae-hoon, 1999). However, in the 1980s it was difficult to expect similar results due to the emergence of cheaper labor in Southeast Asia and Latin America. Wages had increased in South Korea during the great 1987 labor struggles. The Ford-style of mass production was being transformed into smaller production of diverse products. Multinational companies were pursuing openness and deregulation of the markets and were seeking to set up standards on free trade. The Korean economy had no choice but to undergo industrial restructuring from an export-oriented economy to a high-value earning economy. Many Korean companies took the opportunity of transferring their operations overseas (Southeast Asia, China, etc) in search of cheaper labor (Kim Kyung-hee, 1994).

Finally, foreign investments in South Korea increased from the mid 1980s. The US-dominated world economy was beginning to invest in multinational companies and the stock market, and from 1986 to 1989, South Korea with the "3 lows" (low price of oil, low dollar rate, low interest rate) in its favor, experienced a brief economic boom (Lee Jae-hoon, 1999). However, with increased investments by the multinational companies in Asia, the US started pressuring Korea for market opening in order to protect its investments (Yoon Jin-ho, 2000). Multinational investments increased rapidly in the financial sector and with the deregulation policies of the government, the entry of foreign banks into the local market accelerated. Heavy foreign investments were also seen in the stock market and with the easy entry of speculative capital, foreign investments in the stock market exceeded 60%. Foreign capital investments in Korea accelerated in the early 1990s and Korean investments in overseas operations also increased sharply.

Two main strategies were undertaken by the Korean government to strengthen national competitiveness - policy to strengthen the chaebols and a flexible labor policy. Under the rationale that bigger chaebols were needed to compete with transnational companies, the government abolished or reduced several related restrictions. The government also provided them with financial aid. In 1996, South Korea became a member of the OECD and as a result was compelled to open all sectors of the economy (financial, labor market, trade, etc). One key market opening was the short-term capital market that had the potential to cause economic instability. Despite such inherent risks arising with OECD membership, the South Korean government was compelled by the strategies of the Korean capital market to become part of the bigger world capital market (Lee Jae-hoon, 1999). Korean capitalists felt threatened by the rapid growth of transnational capital and had to adopt measures to enter world markets. In addition, the globalization of production of transnational companies was becoming common in developed countries (Yoon Jin-ho, 2000). The flexible labor policy of the government was based on the theory of 'survival of the fittest' thought to be necessary for survival in the world markets and gave Korean companies more freedom in dealing with labor to react swiftly to the changes in the world markets.

The result of the policy to integrate to the world economy was to ask the IMF relief fund in 1997. To meet the challenges in the flow of the world economy, the Korean economic strategy was based solely on the interests of the capitalists. The inflow and outflow of short-term capital accelerated with its membership to the OECD. Speculative money entered the stock markets, Korean banks brought in foreign capital without discretion and many Korean companies set up overseas operations. But rumors had been rampant about a Korean economic crisis and the continuing bankruptcy of Korean corporations lowered the financial credibility of the country. The sudden exodus of foreign speculative capital finally led to the foreign currency crisis. Therefore, the economic crisis was not only due simply to internal reasons but also to the globalization policies of the capitalists. This is also reflected in the restructuring programs of the government.

The restructuring program of the Korean government followed the instructions of the IMF. The main demands of the IMF concerned the liberalization of trade, capital, and the financial sector based on the policy of neo-liberalism where external trade must be opened up and there must be complete liberalization of the capital/financial market. The Korean government adopts various policies to enlarge the foreign investment and offers foreign investors special benefits. The capital and financial markets were liberalized and restrictions on the stock markets were lifted.

As can be seen from the above, the Korean economy has been incorporated with the US-dominated world economy from the start of industrialization. The US, by taking advantage of the foreign currency crisis, has made the inflow and outflow of transnational capital possible and has demanded that the Korean government carry out a restructuring program designed to ensure its investment stability in the financial markets.

2. The Trend of Change of Korean Women Workers

The economic development increased the participation in the labor market of women workers since the 1960s. The economic policy at that time focused on developing the export through the labor-intensive industries that made a big increase in the number of workers employed in factories, especially the number of women workers. As well, the percentage of manufacturing companies increased in relation to all other industries. The economic growth and the increase in exports were through the labor-intensive industry. In addition, the companies preferred the women workforce because they are more stable and cheaper.

The main industries employing women workers were the textile and garment industries from the 60s to the 70s. In 1964, over 60% of women workers in the manufacturing industry were concentrated in the textile and garment industry, and women workers made up 75% of all workers in the textile and garment industry. This trend continued into the 70s, when the percentage of women workers in the textile and garment industries reached over 70% and the number of women workers in rubber and electronic & machinery industry also continuously grew. On the whole, women workers were working in labor-intensive industries such as large factories geared for export. The majority of these women were teenager workers, and it can be assumed unmarried. The 86.7% of the women in this industry were between 17-24 years old.

Long working hours and low wages characterized the working conditions of these women workers. According to ILO statistics, the average number of work hours per week in Korea was 50.3 hours in 1960 and 57 hours in 1965. Although this number decreased to 54 hours in 1970, it was still the longest workweek in the world. Wages were also extremely low. Of course, along with economic growth the average monthly salary increased from 15.2 dollars US (3,880 Korean won) in 1964 to 44.8 dollars US (14,150 won) in 1970. However, compared with wages in other countries it was still low. To earn the same amount as a Korean worker working 220 hours a month, an American worker needed to work only 13 hours. Women workers were paid less than male workers. In 1966, a woman worker working in Dong-il Textiles was paid 70 Korean won a day. Even working 30 days a month, the worker still only earned 2,100 won, which was only 54% of the average income in Korea (ILO statistics). Of course, it could be said that the low wages reflected the worker's young age and lack of experience. However, since the vast majority of women workers were young and lack of experience, there was no such standard.

The growth of production and exports in 1960s and the 1970s could be attributed to the sweat and blood of many women workers in the manufacturing sector. The manufacturing industry that included textiles, footwear, electronics, and others employed many women workers and it produced over 45% of all exported commodities in the latter half of the 70s (Lee Ok-ji et al, 2000).

In the early 80s, women's participation in the labor market continued to increase. The rate of economically active women increased from 42.8% in 1980, to 46.5% in 1989, and reached 47.3% in 1991. This is contrast to the decrease in the rate of economically active men in the same period, from 76.4%(1980), 73.3%(1989), to 74.7%(1991). The main area registering increases of economically active women was the manufacturing industry, particularly those sectors that mainly employed women such as textiles, footwear, and electronics. These three sectors particularly grew rapidly in employment and production despite the recession in the end of the 70s and the early 80s.

However, these three sectors experienced a decline at the end of the 80s. Since the 80s, the appreciation of the Korean won relative to the US dollar, global trade protectionism, and intensified of competition between developing countries such as Southeast Asia, China, etc. became a threat to Korean businesses that depended on the exports of labor-intensive commodities. The government changed the industrial structure to technology-intensive and capital-intensive industries, through industrial restructuring policies of rationalizing declining industries, recovering the competitiveness of growing industries, and encouraging high-technology industries. Capital responded to industrial restructuring by closing down factories in labor-intensive, low-wage, and export-oriented manufacturing sector, and/or relocating production lines, subcontracting, automating, transferring to other sectors, or using irregular labor. Women workers were the most affected by industrial restructuring. In reality, from 1989 to 1993, the number of women workers in manufacturing jobs decreased to approximately 291,000. This reduction was the result of bankruptcies or shutdowns of textile or footwear factories, and the subcontracting of electronic companies. The industrial restructuring influenced women workers by strong intensification of labor, the marginalization of women's labor, the devaluation of women's skills, exclusion of women from skilled work, as well as unemployment.

Especially since the 90s, it is clear that increasing subcontracting and temporary employment caused the marginalization of women's labor. The fact that the women's labor force is becoming subcontracted illustrates the change of marital status of women workers in the manufacturing sector. The percentage of married women working in this sector greatly increased from 13% in 1981 to 42% in 1992. This percentage is higher than the average percentage of married women (37%) in all industries. Kim Kyung-hee (1994) asserts that this is due to increasing subcontracting within the manufacturing sector. That is, with the social trend of unmarried women preferring white-collar jobs, married women are working in small factories near their homes or working as home-based workers. As a result, the rate of married women working in manufacturing overtook the rate of unmarried women. Temporary employment also radically increased in line with government labor market flexibility policy, particularly exploding after the economic crisis of 1997.

Temporary or daily employment for women has been increasing since 1985. Now over 70% of women workers are employed as irregular workers. Women workers were first fired after economic crisis of 1997. They were later employed as irregular workers. According to a recent report, the growth of women's employment is in temporary work and reduction of women's employment is in regular work. Informalized workers are treated discriminatingly due to their informalized status in the labor force. Their wage is much lower than regular workers' even though they did the same work. They are also excluded from social insurance.

3. The Resistance and Empowerment of Women Workers

The struggle of women workers for rights has been continuing. In the 1970s, the struggle for the right to life by women workers began in earnest. Women workers at the time were facing issues of low wages, long hours, bad working conditions, and discriminatory treatment. Demanding for changes in labor conditions and human treatment began their grim struggle. Also, while strongly criticizing yellow unions that had oppressed women workers and were at the command of capital, democratic labor union activism also developed. Through these pioneers, the first female chairperson was elected in 1972 and in addition, the women worker-led labor movement developed from spontaneously occurring sit-ins and strikes into an organizational activist form. Intense struggles to create democratic labor unions and struggles for the right to life in Namyoung Nylon in 1976, Bando Firm in 1977, Dongil Textiles in 1978, and YH Firm in 1979 were representative struggles in the women workers movement. Their struggles highlighted issues specific relating to women workers. The Control Data Labor Union was one case where they dissolved the system of firing women workers after marriage and they obtained a 60-day maternal leave benefit. Moreover, as evidenced through the Namyoung Nylon Fired Workers Case in 1977 and the 1978 case at Dongil Textiles, the women workers struggles influenced women of other classes and their issues began to be widely known in society (Kim, Young-jung, 1999).

In the early 1980s, the Garment Workers Trade Union and the Wonpoong Mobang Labor Union was dissolved due to the harsh repression of the Chun Doo-whan Regime while the Korean Control Data Labor Union was dissolved due to the withdrawal of foreign capital. However, women workers, through the Kuro Alliance Strike in 1985, established a new line in solidarity struggle and political struggle in labor activism. After 1987, blue-collar women workers activism also marked a new direction. Up until that time, women workers demanded change regarding issues of women in certain areas or in a spontaneous fashion, but after 1987 women workers activism entered new territory. After 1987 in the labor union movement, the formation of women workers activism and women workers associations resulted in the strengthening of women workers activism (In-soon Wang et al, 1998).

The patriarchical nature of capitalism is degrading the labor conditions and quality of life of women workers due to gender-based ideology and the logic that globalization is a part of the generational flow that cannot be stopped. In this situation, the only way to protect women labor rights is through the struggle and solidarity of women workers. On the one hand, employment instability due to globalization has forced women out of the labor market and lowered their quality of life. However, on the other hand, in the process of organized resistance against the crisis of employment and companies' unjust treatment, women workers obtain their class identity as workers and gender identity as women. Therefore, in this period, it can be said that workers are becoming more conscious of the importance of solidarity and organization. The result is that women workers are becoming assertive in maintaining their rights.

In the history of Korean women workers' movement, cases of irregular women workers struggling and organizing unions have been rare. However, in the situation where 70% of women workers are temporary or daily workers - estimated 500,000 dispatch workers, and another one million pseudo-contract workers and others who are not recognized as workers - the creation of labor unions and struggles of irregular women workers are remarkable. These women workers such as golf caddies, home visiting teachers, animators, insurance salespersons, etc. are not officially recognized as workers in the Labor Standards Law but are struggling to maintain their rights through the creation of labor unions.

The change in organizational perspective accelerates this trend. The existing labor union federations are trying to organize these workers with the recognition that if they are not organizing irregular and/or unorganized sector, there can be no development of the labor movement. New organizing strategies such as women workers labor unions are therefore an important element of this trend. Women's trade unions, which began to be organized from 1999, are creatively organizing, stimulating the established methods of labor union organizing. Women labor unions are expected to play an important role in changing the situation of women workers, especially the percentage of organized women workers, which is five to six percent. Their activities are becoming an important turning point of the women's labor movement.

The struggle and victory of other women workers made them encouraged and the sympathy that they have the same experiences made it possible to build solidarity between them. Also, it is clear that their struggle gave motive and courage to fight for other women workers in similar situations. The struggle and solidarity of women workers should not start and end in only one country. In order to fight against the exploitative nature of transnational capital, which searches the globe for cheap labor and threatens the labor rights of each country's workers, it is necessary to continue international solidarity efforts.

Jin-young Park, Korea Women Worker's Associations United