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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 recognise 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 summarised 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 parcelling 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." [These documents are found at http://www.worldbank.org/html/extdr/offrep/eap/krsalii/krsalii.html.]

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."