SKorea Adopts IMF Economy Demands
SEOUL, South Korea (AP) _ Parliament showed its commitment to reform Saturday, passing an economic restructuring package, including a bill that gives businesses greater freedom to lay off workers.
The package satisfies a key demand of the International Monetary Fund, which organized a record $57 billion bailout for South Korea’s battered economy two months ago. The IMF loan requires the country to make its labor market more flexible to re-attract foreign investments.
The reform package had been stalled for two weeks in Parliament, raising doubts that President-elect Kim Dae-jung could deliver on his promise that lawmakers would pass it by midnight Saturday.
With international and domestic pressure mounting, rival parties struck a last-minute compromise and passed 17 economic reform bills, minutes before the deadline.
There was no immediate reaction from the country’s militant labor unions, which have threatened to call nationwide strikes in auto and other key industries once the single-house National Assembly approves layoffs.
The new legislation, among other things, gives the country’s bloated, debt-ridden conglomerates the freedom to trim their work forces, effective immediately, and become more competitive.
In return, it requires the family-run conglomerates to eliminate the practice of hidden cross-funding by their many subsidiaries.
Such reorganization was deemed vital by the IMF and most Western governments to wooing back foreign investors who fled the country last year, aggravating a financial crisis.
But the labor unions, accustomed to decades of lifetime employment, have resisted the layoff bill, which some fear will drive up to 1 million workers out of their jobs.
Until now, layoffs have been virtually impossible without the approval of labor unions or a court.
The unions had called a nationwide strike to kill the layoff bill this month, but on Friday the canceled the walkout, bowing to concern that labor unrest would increase financial turmoil,