Militant South Korean unions began a two-day strike yesterday to protest against soaring unemployment and the prospect of mass layoffs. The stock market took another dive.
Mr Lee Kap-yong, head of the Korean Confederation of Trade Unions (KCTU), which is spearheading the strikes, said 125 unions and 120,000 members are joining the strike. The KCTU has a total membership of more than 550,000.
"No layoffs," some 1,500 angry union activists chanted as they marched in the capital Seoul, undaunted by the heavy presence of riot police armed with water cannons, clubs and teargas rifles.
The KCTU is one of the two umbrella unions in South Korea, where being fired and jobless are new and embarrassing concepts to people used to jobs for life.
Worried the strikes will damage the country's image and scare away much-needed foreign funds, the government decided against using force to break up the strikes, a government official said.
Mr Lee said the KCTU would continue talks with the government even during the strikes.
On Tuesday, prosecutors urged employers to lock out workers if the action went on too long. The Supreme Public Prosecutor's Office said the strikes were "clearly illegal".
The confederation said the strikes would last for two days but could be extended if the government uses force.
The KCTU said it is striking to demand a stop to mass layoffs, an increase in unemployment benefits, more reform of big conglomerates and a renegotiation of the International Monetary Fund's $58.35 billion bail-out package.
The Korea Stock Exchange was hit by another wave of selling. Shares on the key composite index fell 2.33 per cent, or 7.27 points at the lunch break as investors became unhinged over the prospect of labour unrest.
A chain reaction of bankruptcies leading to spiralling unemployment and further stress on a banking system burdened with $84 billion in troubled loans is setting the stage for a new crisis.
The government is expected to announce early next month which of Korea's many credit-starved companies will continue to get bank financing and which will be allowed to die, leading to major uncertainties in the market.
The general strike is the first since early last year, well before the Asian economic crisis hit South Korea, and since President Kim Dae-Jung came to power in February supported by the unions.