CHEONGJU, South Korea, 4 September 2003 — Swiss multinational Nestle yesterday joined the growing list of foreign firms bristling at labor unrest, saying it is considering pulling out of South Korea as a result. Nestle, operating in South Korea for more than two decades, has already closed its local headquarters in Seoul.
“Our head office has instructed us to consider legal steps for the closure of Nestle’s plant in South Korea,” a Nestle Korea spokeswoman told AFP. She said Nestle’s management was exasperated by “reckless” labor action by workers affiliated with the Korean Confederation of Trade Unions, a militant labor group.
But in a statement in Vevey, Switzerland, the food giant said that it was not considering withdrawing from South Korea. A company spokeswoman said “Nestle has not required its Korean subsidiary to consider withdrawing from the country.” However, she also said the parent company had asked its subsidiary “to study the legal procedures with a view to closing our factory in South Korea”.
The group has led a wave of labor strife, demanding shorter working hours and union participation in management decision-making which has already led to the closure of four foreign-invested firms operating in South Korea this year.
Nestle Korea’s 460-member union went on strike on July 7 demanding a 11.7-percent pay hike and a say in management. The company has proposed a 5.25-percent wage increase. About 400 striking workers, however, ignored the company’s warning and vowed to stage an “uncompromising” struggle during a rally at the plant here in Cheongju, 140 kilometers south of Seoul.
The strikers wearing red headbands waved flags or raised their fists into the air, chanting “job security” and vowing to continue their walkout. The walls of the factory were plastered with slogans demanding labor “solidarity” and union activists handed out leaflets accusing the company of pushing for unilateral corporate restructuring.
The food company launched operations in South Korea in 1979 to produce and distribute coffee, beverages and confectionery. It now controls 40 percent of South Korea’s coffee market.
Nestle Korea complained its competitiveness has been seriously undermined by militant union activity and double-digit wage increases in the past three years.
“Its very regrettable for Nestle to study the closure of domestic operations,” Nestle Korea president Sam Lee said. Nestle Korea denounced what it sees as illegal sit-in protests and violence by unionized workers. “Nestle will abide by the ‘no work, no pay’ principle. Proper labor activity will be respected but the company will not tolerate union interference in management,” it said in a statement.
Meanwhile, faced with a strike that has cost more than $600 million and dragged on for two weeks, South Korea promised yesterday to block any further attempts to disrupt freight flows after police detained 150 striking truck drivers.
Foreign investors and business groups are closely watching the truck strike and other labor disputes. They have urged a tough stand after the young government of President Roh Moo-hyun caved in to labor demands during earlier disputes.
The government has said truck drivers, who are mostly self-employed, cannot form a labor union. But drivers say they are hired by transport firms and have been striking for higher freight rates and recognition of their union.
“The government has decided to arrest anyone who joins illegal collective action and deal with stern punishment,” the Office for Government Policy Coordination said in a statement after a meeting of senior government officials.