S. Korean economic woes raise ghost of Asian crisis

SEOUL, South Korea (AP) -- Tens of thousands of layoffs. Violent labor protests. Conglomerates facing bankruptcy as scores of smaller firms go under.

Surely this isn't the same South Korea that was rebounding strongly from the Asian economic crisis, which swept across the region three years ago and triggered fears of a global financial emergency.

Think again. ''Nobody knows how desperate we are,'' said Koh Hyong-choon, a 38-year-old father of two who expects to lose his job at a money-losing chemical factory here set to soon close.

South Korea, long a symbol of Asian business prowess, faces a surprising return to some familiar problems in an eerie echo of the 1997 crisis. Today, South Korean corporate titans such as Hyundai and Daewoo are deep in red ink, some 100,000 workers are e xpected to lose their jobs by year's end and labor unions are growing restive.

South Korea isn't as bad off this time around, and its plight seems unlikely to spread to other countries, economists say. But the woes are raising concerns about the durability of Asia's fragile rebound, with Indonesia, the Philippines and Thailand stil l struggling to recover from rising debt, political instability and financial mismanagement.

The 1997 recession was triggered when Thailand devalued its currency and set off a chain reaction across the region. Thousands of financially weak companies in South Korea collapsed. Unemployment soared in a nation where workers were accustomed to lifeti me jobs. South Korea required big bailout loans overseen by the International Monetary Fund.

South Korea, a major global exporter of autos and electronics, has since lured back foreign investors, greatly shored up its foreign currency reserves and pressed ahead with wrenching financial reforms. Now, those reforms themselves are causing hardship, demonstrating the fragility of the recovery and arousing the enmity of unions and thousands of uneasy workers.

Underscoring the predicament, some economists fear the South Korean economy will shrink again if the government fails to speed up reforms by shutting down heavily indebted, money-losing companies.

Typical is Koh's employer, Korea Synthetic Chemical, a bank-owned concern that loses an average of $17 million a year and probably will close by year's end, stranding hundreds without jobs.

South Korea's jobless rate is expected to rise by half a percentage point to 4 percent, or 910,000 people this year -- well below the 9 percent peak in February 1999.

That's no consolation to Koh, who supports his family on his $1,000 monthly salary, which includes housing and other subsidies.

Major labor unions have vowed to resist layoffs, raising the prospect of a round of labor protests similar to those during the IMF crisis, when hundreds of thousands of workers were driven out of jobs and held rallies against what they blasted as inept c orporate management.

http://www.dominionpost.com/a/news/2000/11/27/ap/

-- Martin Thompson (mthom1927@aol.com), November 27, 2000