Voice of Electricity Workers April-June 2002 Index
A REPORT ON THE KOREAN ELECTRICITY WORKERS STRIKE (THE INTERESTING DETAILS)
On March 5, 2002, the CEOs of the five power companies, all subsidiaries of the
Korea Electric Power Corporation, held a press conference to declare an end to
negotiations. They declared, "trade union is demanding the reinstatement of
dismissed workers, which cannot be an object of negotiation, and the withdrawal
of the plan for privations of the power industry, which is proceeding in
accordance with the law." The power CEOs, then, revealed their decision to
abandon "wasteful" negotiations, and to wait and comply with the award of
compulsory arbitration by the Central Labour Relations Commission.
However,
the heads of the subsidiaries of the government-owned Korea Electric Power
Corporation went on to indicate that "we can always return to negotiations if
the union proposes to discuss measures for employment security on the
precondition that it accepts the privatisation plan."
At the same time, they
announced a plan for stepped up attack on the striking workers. "If the union
members who were additionally reported to police [for illegal offence] on March
4 do not return to work, individual companies will hold disciplinary boards to
mete out heavy penalties". On March 4, the companies had decided to dismiss 47
unionists and made additional report to the police against 200 unionists,
bringing the tally to 252.
The Management, the Most Potent Fuel Powering the
Strike
Lee Ho-dong, the president of the Korean Power Plant Industry Union,
with some 5,600 members out of a total of 8,600 employees in the five power
companies responded that the strike will continue until the issue of
privatisation is resolved.
The management attitude on the ninth day of the
strike was nothing strange to the union leaders and members since they began the
engagement with companies since the union was formed in June 2001. All five
power companies were established in April 2001, when the Korea Electric Power
Corporation parcelled out the power generation into 6 separate (subsidiary)
companies. At the time of the spin-off, the management had pledged to "inherit"
and respect the collective bargaining agreement obtained between the Korean
Electric Power Corporation and the union for workers who now came under new
management. When a new union was set up bringing together the workers in the
five new subsidiaries, the management refused to recognize the union and
"inherit" the previously existing CBA. The management repeatedly refused to
attend collective bargaining session requested by the newly formed union. And
when it did finally show up, at the end of numerous sessions, it was willing to
agree to only a handful of articles of the proposed 156 article CBA. For the
rest, the management stuck with "unacceptable", and called on the union to
"strike out" the clauses.
Power Workers' Demands
The demands of
the workers of the five power generating companies can be summarized as:
"
withdrawal of the privatisation plan
" conclusion of the CBA
"
reinstatement of dismissed workers
The central goal of the striking
electricity workers to bring an end to the government initiated privatisation
plan.
Privatisation: an attack against the workers, people, and society
The parceling out of the KEPCO's power generation activities into 6 separate
companies was the first step in the eventual sales of the power plants to
private operators. The union and workers at the KEPCO began their campaign
opposing the government's plan from 1999. The campaign came to a sudden stop
when the KEPCO Workers Union, on December 3, 2000, called of the planned strike.
The erupt conclusion of the union's resistance opened the way for the government
initiated passage in the National Assembly of the "Act for the Promotion of
Structural Adjustment in the Electric Power Industry".
Slash, Trim, and
Sell
Following the legislative groundwork - which foresees the
electricity power industry integrated in the KEPCO to be divided into
generation, transmission, and wholesale and retail distribution and privation at
each of the stages - KEPCO's generation activities were spun-off into 6 separate
companies. On April 2, 2001, KEPCO's non-hydro and non-nuclear generation
capacity was carved up set up as Korea Midland Power Co., Ltd. (1,898
employees), Korea South-East Power Co., Ltd. (1,563), Korea East-West Power Co.
Ltd. (1,800), Korea Western Power Co. Ltd. (1,610), Korea Southern Power Co.
Ltd. (1,734). These five companies, responsible for around 60% of power
generation in south Korea, are all to be sold off to private operators in
accordance with a schedule agreed between the Korean government and the World
Bank. The sixth company, Korea Hydro & Nuclear Power (6,151), is excluded from
the sales list. The KEPCO currently employs 19,000 workers for transmission,
distribution, and maintenance and consumer service activities.
The spin-off
was preceded by a radical restructuring aimed at cut-backs in the size of
workforce. As a part of the government's overall "cost saving" measure in the
public sector - whose result was 20-30% reduction in regular employment across
the board - nearly 7,000 workers were retrenched from the KEPCO.
Through two
major waves of retrenchment in compliance with the government directive, the
KEPCO slashed the workforce in 1998 and 1999. In the first round 3,061 workers
were retrenched, bring the size of the workforce from 37,827 (at 1997 year-end)
to 34,766 (at year-end 1998). In the second act, further 3,765 workers
dismissed.
In slashing the jobs at the KEPCO, the management demonstrated a
great efficiency and ruthlessness by overachieving the retrenchment quota set by
the government, by 189% in 1998 and 139% in 1990.
As a result of the radical
cut backs in the workforce, work intensity was aggravated. One of the key impact
on the working conditions was change in the shift system for those workers
involved in the maintenance of the 24 hour power generation operation. Before
the retrenchment, workers were engaged in 3 shifts around the clock through a
rotation by 5 teams. Following the "redundancy", workers now work the 3 shifts
in 4 teams. Workers fear that this may even worsen to 3 shifts by 3 teams.
It is expected even more retrenchment could be undertaken as the management
prepares the companies for the sale. The government has put in place a plan and
schedule to sell two power companies in 2002 and the rest from 2005.
Apart
from additional crunching impact on job losses and working conditions,
privatisation of the power companies is expected to result in gross losses for
the people.
The Costly and Absurd Sell Out
A study undertaken by
one National Assembly representative found that privatisation would cause some
50% increase in the cost. At the same time, if power generation is privatised
and the decision on investment for new facilities are left to private
enterprises, it is likely that power needs of the nation could not be met.
A
study on the future power needs undertaken in 2000 found the power generation
facilities would need to be doubled by 2015. The cost of building power
generation facility costs around 100 billion won per 100 megawatts, and takes
nearly 10 years from the moment of designing the plan to the completion.
It
would be difficult for such a project to proceed without financial support from
the government. This, however, raises the question of legitimacy of government
support for private enterprise that operates for private profit. But, on the
other hand, the government and people would be faced with the dilemma of
insufficient power supply.
Privatisation of the power plants would require
the government lending money to the private company to buy them, as the cost of
a power company range between 3 to 5 trillion won. In June 2000, a thermal power
plant jointly owned by the KEPCO and Regional Heat Supply Corporation was sold
to LG Power (a consortium made up of LG Caltex Petroleum Refinery [26%], Texaco
[25%], LG Caltex Gas [24.5%], and Kukdong Gas )[24.5%]. The power plant was sold
for 771 billion won - the paid up capital of the consortium was 78 billion won.
The consortium was able to take over the plant with a loan from a
government-controlled bank and issuance of company bonds, all together totalling
530 billion won. [This power plant which provide heat to 170,000 households
raised consumer price by 9.13% in January 2001 and then further 26.8% in July.
The government, in order to avoid public furore, provided subsidy to the company
to cover for the increase price.]
It is difficult to understand the
government's insistence on privation unless it is to satisfy some private
enterprises who wish to enter the lucrative and essential service market. Over
the last decade the KEPCO made ever increasing profit. 606 billion won in 1990
increasing to 1.5 trillion won in 1999, and 1.7 trillion won in 2000.
The
Urge to Give Away to Foreign Capital
Most of the power plant could not
but be sold to overseas operators. And it is expected that the government would
have to provide the arrangement for financing of the purchase by private
operators. It would create a situation where the government lends money to
private (foreign) operators so that they can buy the national assets, and then
provide further financial assistance for the private companies to expand the
generation facilities, which would be use to create private profit.
The
Ministry of Commerce, Industry, and Energy announced that 4 to 5 domestic and
foreign companies, led by the U.S.-based Mirant, have already shown interest in
the planned sale of the power companies. However, as the asset value of each of
the power companies that have been separated from the KEPCO range between 3 to 5
trillion won, the takeover price and the arrangement for financing are expected
to be subject to extreme jockeying. (Mirant [www.mirant.com], on December 4,
2001, announced its plans to acquire Hyundai Energy Company Ltd. (Henco). Its
news release states, "Through the Henco acquisition, Mirant plans to build a
520-megawatt, combined-cycle power plant in southern Korea").
On March 6, as
the strike to stop privatisation of power industry went into eleventh day, the
Ministry of Commerce, Industry, and Energy announced further plans to parcel out
the distribution sector of the KEPCO. It calls for the spin-off of the existing
KEPCO distribution activities into 6 regional companies, which would then be
privatised from the next year.
Korean government's power industry
privatisation plan is primarily aimed at selling to overseas operators. The
current plan allows foreign operators to own and manage power generation
facilities up to 30% of the total national generation capacity. It means up to 3
power companies could be sold to foreign capital. This contrasts starkly even
against the most famous case of privatisation in Great Britain. In 1991, when
the British government embarked on privatisation of the power industry, it
allowed only financial participation of up to 20% of the total share of the
companies, without allowing takeover over of management.
The World Bank,
The Neoliberal Master, Powers the Privatisation Drive
The current
privatisation of the power industry is rooted in the "agreement" the Korean
government made with the World Bank in 1998 in the aftermath of the financial
melt down that hit Korea from Thailand. In the scurry to obtain financial
support and political banking of the International Monetary Fund and the World
Bank, and the "confidence" of international investors [who demonstrated their
power to run a country to ground] the Korean government agreed to undertake
privatisation of the "infrastructure" sectors.
Following a number of rounds
of weeks of "consultation" with the World Bank and IMF representatives, the
Korean government, finally in September 1998, in the form of a letter from the
Minister for Finance and Economy to the President of the International Bank of
Reconstruction and Development [structural adjustment arm of the World Bank],
submitted a plan for privatisation. The letter reads, "Building on the
understandings reached under SAL [structural adjustment loan] I, the Government
has initiated a major program of reform and privatisation of state-owned
corporations." The attached "Policy Matrix" which spells out the actions the
Korean government is required and committed to undertake dictates, "Announce a
program of privatisation, including identification of SOEs [state-owned
enterprises] to be offered for sale". It then provide even more specific course
of action for telecommunication, power, and gas. For these infrastructure
sectors, the government is required to "Adopt and announce an overall strategy
acceptable to the Bank for dealing with structural, regulatory and institutional
issues in privatisation."
[One wonders if the World Bank had required the
Korean government to adopt and announce a strategy acceptable to it to deal with
labour and social opposition to privatisation as a part of the "overall
strategy.]
In an annex to the Policy Matrix, entitled "Conditions for Board
Presentation and Second Tranche Release" - that is, the conditions for the
release of the promised money/loan to the Korean government - the "adoption and
announcement of an overall strategy acceptable to the Bank" for privatisation of
state-owned enterprises has been "identified" as one element in the"subset of
key policy actions ¡¦ whose implementation will be a condition for ¡¦ second
tranche release."
The Korean government's fear of "international confidence"
backlash for backing away [even appearing to be backing away] from the
commitment it made to the World Bank's dictate is the only imaginable reason [if
we exclude, for rhetorical reasons, the charge that the government is a
full-blooded neoliberal regime] for both the government's general insistence on
privatisation and its inability to entertain the unions demands, forcing it,
instead, to entertain the "inevitability" of dismissing all or great portion of
the 5,300 striking workers and putting tens of union leaders to prison, risking
unimaginable breakdown of the power plants that serve over 60% of Korea's
electricity consumption.
Collective Bargaining Agreement
In the
course of the separation of the 6 generation companies, a new union was formed
for workers in the 37 workplaces of the five non-hydro, non-nuclear power
generation companies. Korean Power Plant Industry Union (a multi-enterprise
union) was formed on June 28, 2001, registered by the government on July 24.
The Management Hostility
In the course of preparing for the spin-off,
the KEPCO management and the KEPCO union adopted a special agreement on March
21, which, in article 2, states, "The new companies created in the spin-off
inherits and recognises the collective bargaining agreement, the rules of
employment, and other related provisions which stand at the KEPCO."
When it
became known, however, that the new union decided to join the Korean Federation
of Transportation, Public & Social Services Workers Union (KPSU), the
KCTU-affiliated public sector trade union federation, the management reneged on
the earlier commitments. The management of the five companies refused to provide
office space for the union until December. It refused the check-off arrangement
for union membership dues, forcing the newly established leadership to rely on
individually obtained loans.
The major articles of the CBA proposed by the
union not resolved till the moment the union struck were:
" guarantee of
trade union activities
" release from duties for 20 full-time union officers
" guarantee the right and activities of union officers, including prior
agreement between the union and management in case of disciplinary action
against them
" 2 hour release from work per month for members for education
" agreement with the union on: personnel decisions affecting members, e.g.,
redeployment, re-assignment, etc.
" establishment of a personnel committee
composed of equal numbers from the management and the union
" establishment
of a personnel committee composed of equal numbers from the management and the
union; requirement of 2/3 majority for a disciplinary dismissal
"
establishment of an "employment security committee" composed of equal numbers
from the management and the union
" wage determination which reflects
productivity improvement and inflation
" prior agreement between the
management and the union on changes that affect wage, welfare, etc.
" 40
hour work week
" maximum of 180% penalty rate for overtime (especially for
work on rest day and night work)
" long service paid leave and paid summer
holiday
" gender equality and maternity protection
" guarantee against
disadvantage to workers participating in industrial action, ban on "scab", and
wage compensation for the period of industrial action
Apart from these CBA
demands, which aim to establish the basic framework and reference for
labour-management relations at the workplaces, the union has called for increase
in staff level.
The current level of workforce in the five power companies,
reduced by more than 6,000 through retrenchment, falls short of even the
government-"prescribed" level by 189. The company currently has no plans to
supplement the workforce even in the face of the imminent start of operation by
4 new generation engines currently under construction. In order to cut back on
the cost, the companies are planning to shelve the current contract with another
subsidiary of the KEPCO for "light maintenance" work, forcing the operators to
take on additional tasks.
The union also demands the reinstatement of three
union leaders who were dismissed in 1994, 2000, and this year because of their
trade union activity. However, the management of the five companies has already,
in the course of the strike, fired some 50 union leaders, filed legal action
against some 500 union shopstewards, have initiated disciplinary action against
hundreds of workers. Police has issued warrants of arrest out against 24 union
leaders and is currently running a dragnet against a total of 52 union
activists. The management has also posted media advertisement for new hiring of
1,000 workers, indicating a an intention to sack a great portion of the workers
now on strike.
The Management Ineptitude
The Central Labour
Relations Commission noted that there were 10 sittings of negotiations between
the management and the union from September 2001 when it had received the
dispute between the 5 power companies and the union on February 9, 2002. The
union had presented for negotiation its proposal for a CBA which contained 156
articles (later reduced to 146). Until the dispute was referred to the
Commission, agreement was made on only 15 articles. In the course of
negotiations since the union struck on February 24 (formally declared in early
morning [4 a.m.] of February 25) - till the moment the Central Labour Relations
Commission referred the dispute to "compulsory arbitration" in the early morning
(5 a.m.) of February 25 - agreement was reached on all but 2 articles.
A
senior official of the Labour Ministry, who was involved in mediation efforts,
was forced to comment, "one of the factors fuelling the power workers strike is
the inability of the management to understand what industrial relations requires
and the attitude and actions which simply aim to crush the union."
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