International banks are to meet in New York today to draw up a financial aid plan for South Korea, reports in Seoul said yesterday, but president-elect Kim DaeJung faces a tough challenge over widespread layoffs demanded by the International Monetary Fund (IMF).
Commercial banks from Japan, the United States and Europe will discuss ways to help Seoul, Japan's vice finance minister Eisuke Sakakibara said in Tokyo.
"South Korea is being saved from the crisis," he said.
Banks were expected to confirm they would roll over loans to South Korea to prevent its financial crisis from worsening, Jiji Press reported, quoting financial sources.
Under an agreement last Wednesday the IMF and 13 industrial nations are rushing $10 billion to Seoul to help it meet short-term debt that threatens to swamp the country.
US Treasury Secretary Robert Rubin said the support was being provided in the context of a substantial and voluntary deferral of repayments by international creditor banks.
The IMF has organised its largest ever package of $60 billion to rescue the world's 11th largest economy. But the tough reforms demanded in return have proved hard to swallow.
Kim, a former dissident, appealed to union leaders Saturday for help to rescue the economy. He proposed a consultative body involving the government, management and labour to limit layoffs and guarantee jobs for employees of merged firms.
The militant Korean Confederation of Trade Unions agreed to his other suggestion of a wage freeze. But in return it demanded the dissolution of family-run conglomerates, or chaebols, and the punishment of government officials responsible for the economic debacle.
Unions and the president-elect agreed that family dominance over the mighty conglomerates should be removed to restore international competitiveness.
But union leaders insisted layoffs should be the last resort after the eradication of deep-rooted collusion between the government and chaebols.
Some 2,000 union activists held rallies in Seoul and three other cities Saturday, accusing Kim of back-pedalling on his campaign pledges to prevent lay-offs in return for a wage freeze.
"Before the government asks the people to share pain, government officials and others responsible must be punished and owners of chaebol must resign," confederation acting president Bae Bum-Suk told a rally in Seoul.
"We workers, are deeply disappointed and feel betrayed by President-elect Kim Dae-Jung," he said.
Parliament will today consider a reform package partially designed to ease mergers and acquisitions of ailing financial institutions.
In a sign of his determination to break cosy links between politics and big business, Kim called yesterday for last-minute revisions to the bills - notably to ensure the independence of the central bank.
