FOCUS March 2014 Volume Volume 75

Human Rights in Overseas Business Operations: The Case of Korean Companies

Korean Transnational Corporation Watch

The Korean Transnational Corporation Watch (KTNC Watch) undertook a field investigation in 2013 regarding human rights and the operations of Korean companies in several countries. Its research teams visited a number of local sites and interviewed workers, Korean company officials, residents in the areas surrounding the company premises, and government officials in the Philippines, Myanmar and Uzbekistan.

Philippines

Korean companies have been doing business in the Philippines since the 1960s. At present, a large number of Korean companies are in diverse areas of business in the Philippines involving manufacturing, construction, and shipbuilding industries. Korean investment is the second largest foreign direct investment in the Philippines, while Korean companies play a major part in the Philippine business community with many of them belonging to the one thousand biggest firms in the country.

The field investigation in the Philippines covered Korean company operations in special economic zones (EPZs). Of the two EPZs visited, one was the Subic Bay Freeport Zone where a big Korean shipping and construction company established business in February 2006, and currently employs thousands of workers.
Workers in this Korean company complain of lack of security of tenure in their employment. According to workers interviewed, the company would register them as workers of subcontractors, or dismiss and re-hire them to prevent them from becoming regular employees under the Philippine labor law.

This situation has affected the workers’ effort to organize a labor union within the company. The workers of this shipbuilding company have been trying to form a labor union since 2007. Their leaders, however, were either fired or transferred by the company as soon as they undertook the initial labor union activities. The company explains that they were fired because of involvement in robbery or theft, or negligence of duty. However, the workers claim that they were fired or transferred by the company to suppress the formation of a labor union.

The workers also complain about accidents in the workplace. They complain of lack of sufficient safety measures to protect workers from such accidents.

Interview of officials of the local government and the Tripartite Body1 (a government-labor-business body that works “under a social pact for the enhancement and preservation of industrial peace in the ECOZONE”) of the Subic Bay Freeport Zone confirms the current issues regarding labor relations and occupational safety in the company. In particular, they acknowledge that the issues of having subcontractors and non-recognition of the employees as regular workers have been raised in a number of occasions already. Regarding occupational safety, they say that the local government occasionally requested the company to observe the local labor regulations and laws. However, Korean companies tended to discuss issues with the central government agencies directly and not with the local authorities.

Myanmar

Nearly fifty Korean companies, mostly in the garment industry, operate in Myanmar. As a consequence of the economic reform and liberalization in the country that included the enactment of the 2011 Labour Organization Law (the law took effect in 2012 and recognized freedom of association),2 conflicts between labor and management have increased in Korean companies since 2012.3

The research team, with the help of a Myanmarese labor non-governmental organization, interviewed eight workers from five Korean companies. The workers provided the following information:

• a) Low wages - the wages of garment workers are low compared to the hours worked; working overtime is de facto structurally forced; and allowance for accommodation does not reach the minimum amount for living expenses.4
• b) Long working hours - since the workers are paid so low, they have no choice but to work overtime. In some cases, the company demands workers to sign a contract that requires them to work on Sundays. The legal provision on forty-four hour work schedule is hardly followed.
• c) Lack of break time and poor working condition - in most cases, workers are only able to take a rest for forty-five minutes during lunchtime. When they work until 11 p.m., they get fifteen minutes of dinner and break time.
• d) Child labor - child workers (under fifteen years old) are common in the factories. They work under the same working conditions as adults.
• e) Violation of health rights - the medical insurance system run by the government of Myanmar has only nominal coverage. Female workers are not entitled to menstrual or maternity leave. They are given one day off when they get married. Their sick leave means wage deduction. Many workers collapse due to long hours of overwork.
• f) Violation of other rights - workers are free to organize a labor union but there are many cases where union leaders and members have been fired or disciplined. In the aftermath of 2012 mass demonstration, working conditions in some factories improved. However, Korean companies tend not to accept any form of labor union except company- dominated union. In the case of a company that produces shoes, members of the union who took part in the strike in 2012 were fired.

Uzbekistan

Korean companies are involved in the cotton industry of Uzbekistan that produces a million tons of cotton fiber annually. A Korean state-owned enterprise (Consortium) started to be involved in Uzbekistan’s cotton industry from 2010 by operating a cellulose factory in the country.

The summary of the information gathered from visits to schools and cotton fields, and from interviews with local activists, provides a picture of the situation in the cotton industry of Uzbekistan as of September 2013:

• 1) Students aged fifteen to eighteen years are being forced to harvest cotton;
• 2) Adult forced labor has intensified;
• 3) The mobilization of schoolteachers for cotton harvesting seriously impedes the right to education of the students in primary and secondary schools;
• 4) Paid child labor is also on the rise as adults evade forced labor by hiring children to take their place; and
• 5) The Uzbek government’s surveillance in 2013 of activists monitoring the situation is more severe than in any other year.

The Consortium has denied the existence of forced child labor in the Uzbek cotton fields saying it was prohibited under Uzbek law. However, the relevant laws are not being implemented properly. And the existence of laws does not mean the non-existence of the problem. The results of the field investigation undoubtedly establish the existence of forced child labor in the cotton industry of Uzbekistan.

Such denial of the existence of the forced labor by the Consortium and other Korean companies makes them complicit in the human rights violations in the cotton industry in Uzbekistan. They have failed to perform due diligence in investigating the human rights violations of children and adults, and in preventing and ameliorating such violations and their consequences.
The Consortium’s denial of the existence of forced labor in Uzbekistan is likely due to concern about any negative public reaction in Korea on its link to forced labor in Uzbekistan. Not surprisingly, the Consortium does little tocurtail forced labor and refuses to consider an independent monitoring system proposed by the KTNC Watch research team. It explains that it has only four Korean managers in its plant, and would prefer not to intimidate the Uzbek government.

For further information, please contact: Korean Transnational Corporation Watch (KTNC Watch) through APIL (Advocates for Public Interest Law), # 505, Girl Scout Building, 163 Anguk-dong, Jongno-gu, Seoul, Korea 110-240); ph (822) 3478-0529; e-mail: info@apil.or.kr; www.apil.or.kr.

Endnotes

1. SECTION 6. Tripartite Body, PART IX - Industrial Harmony in the ECOZONES, Rule XXIII - Labor and Management Relations, Rules and Regulations to Implement Republic Act No. 7916, Otherwise Known as "The Special Economic Zone Act Of 1995", www.peza.gov.ph/index.php ?option=com_content&view=article&id=64&Itemid=56.
2. See ILO report, “First conference of labour organizations in Myanmar since freedom of association law,” 30 April 2013, at www.ilo.org/global/about-the-ilo/media-centre/press-releases/WCMS_212027/lang--en/index.htm.
3. See "Low wages spark labor strikes in Myanmar," The Nation, 18 May 2012, www.nationmultimedia.com/aec/Low-wages-spark-labor-
strikes-n-Myanmar-30182285.html; Sebastian Pawlita and Hnin Yu Mai, “Strikes, unions and dispute resolution,” Myanmar Times, 24 June 2013, www.mmtimes.com/index.php/business/7243-strikes-unions-and-dispute-resolution.html.
4. A worker said that in some areas, the monthly rate had reached 30,000 kyat (around 31 US dollars) due to recent increase in real estate prices in Yangon.

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