SEOUL, South Korea, AP
Two major South Korean commercial banks said Friday they would merge despite a strike by their workers to protest the move.
At least 10,000 workers at Kookmin Bank and Housing & Commercial Bank walked off their jobs Friday, protesting the planned merger that they fear would lead to layoffs.
The heads of the two banks signed an agreement later Friday to complete their merger by June 2001 as part of a government-led reform project aimed at forging mergers among the nation’s 22 banks to create bigger and more efficient banks.
The combined 20,000 unionized workers of Kookmin and Housing & Commercial opposed the merger between their profitable banks.
Thousands of Kookmin Bank workers seized control of their head office and held their chairman hostage for two days last week to disrupt the merger talks.
President Kim Dae-jung’s government mediated the merger talks. The government has major stakes in most commercial banks.
Restructuring of financially weak banks and bloated public corporations is the centerpiece of President Kim’s economic reform program.
The protest by Kookmin and Housing & Commercial workers weakened at the last minute when 2,000 workers at four minor provincial banks — Peace, Kyongnam, Kwangju and Cheju — called off a plan to strike as well.
They dropped that plan after their firms agreed to delay a planned merger until June 2002.
Housing & Commercial Bank said all of its branches remained open, with non-union workers filling the gap. Fourteen out of 591 Kookmin Bank branches were unable to open because of the strike.
South Korea’s labor market has become more flexible because of the 1997-98 Asian economic crisis. But workers still resist layoffs in a country accustomed until recently to lifetime employment.
The Korea Financial Industry Union, an umbrella of labor unions at the nation’s 22 banks said a bigger walkout involving more banks will be held on Dec. 28.
The labor unrest brought additional woes to President Kim, who faces criticism for not moving fast enough on economic reform.
The government has ruled this week’s bank strike illegal and warned that all union leaders will be arrested.
Most South Korean banks are struggling under huge debts incurred by the collapse of thousands of companies during the Asian financial crisis. Persistent concern over South Korea’s shaky financial underpinnings made foreign investors reluctant to return to the country.
Also Friday, workers at Korea Telecom, the nation’s largest phone operator, ended a five-day walkout after reaching a deal with management.
The union of Korea Telecom told its members to go back to work after the company agreed to consult with workers ahead of any job cuts. The union has 47,000 members, but only about 5,000 had been on strike. There were no reports of disruptions in phone services.