Return to: Index of "1994 Country Reports on Economic Practice and Trade Reports" ||
Index of "Economic and Business Issues" || Electronic Research Collections Index || ERC Homepage



U.S. DEPARTMENT OF STATE
KOREA: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS





                           SOUTH KOREA

                     Key Economic Indicators
        (Millions of U.S. dollars unless otherwise noted)


                                     1992      1993      1994 /1

Income, Production and Employment:

Real GDP Growth (pct.)                5.1       5.5       7.6
GDP (at current prices) /2        307,919   330,819   371,600
By Sector: 
  Agriculture/Forestry/Fisheries   22,807    23,402    26,012
  Manufacturing                    85,449    89,647   100,698
  Electricity/Gas/Water             6,770     7,575     8,509
  Construction                     42,104    45,133    50,696
  Financial Services               51,137    56,439    63,396
  Other Services                   57,887    62,431    70,127
  Government/Health/Education      60,048    65,662    73,756
  Net Exports of Goods & Services  -3,083     1,318    -1,900
Per Capita GDP (USD)                7,046     7,501     8,350
Labor Force (000's)                19,426    19,803    20,800
Unemployment Rate (pct.)              2.4       2.8       2.6


Money and Prices:  (annual percentage rate)

Money Supply (M2)                      18.4      18.6      15.0
Yield on Corp. Bonds (pct.) /3         16.2      12.6      12.5
Personal Saving Rate /3                27.1      26.4      27.0
Retail Inflation                        6.2       4.8       6.3
Wholesale Inflation                     2.2       1.5       2.5
Consumer Price Index (1990 base)      116.1     121.7     129.4
Average Exchange Rate
  (US$/1,000 won)                     1.281     1.246     1.245


Balance of Payments and Trade:

Total Exports (FOB) /4             76,632    82,234    92,500
  Exports to U.S.                  18,090    18,138    19,590
Total Imports (CIF) /4             81,775    83,800    97,208
  Imports from U.S.                18,287    17,928    20,384
Aid from U.S.                           0         0         0
Aid from Other Countries                0         0         0
External Debt /5                   42,819    43,870    46,000
Debt Service Payments               5,478     5,500     6,000
Gold and Foreign Exch. Reserves    17,154    20,262    23,500
Trade Balance /4 (cost. basis)     -5,143    -1,566    -4,708
  Balance with U.S. (cost. basis)    -197       210      -794


1/ 1994 figures are all estimates based on available monthly
data as of October 1994.
2/ GDP at factor cost.
3/ Figures are actual, average annual interest rates, not
changes in them.
4/ Merchandise trade.
5/ Includes non-guaranteed private debt.



1.  General Policy Framework

    The South Korean Government's economic policies have
traditionally emphasized rapid export-led development and the
protection of domestic industries.  Government intervention in
the economy to promote these objectives has been pervasive
throughout the post-Korean war era.  Restrictions on foreign
participation in the economy through trade and investment have
been common.  In the latter part of the 1980s, removal of
explicit import prohibitions and steadily increasing domestic
demand began to push Korea toward a more mature stage of
economic development.  Some Korean policy makers recognize the
need to deregulate and modernize, but are still influenced by
the dirigism of past governments.

    The Korean economy is on the rebound.  Growth has been
accelerating since mid-1993, and real GDP in the first half of
1994 rose 8.5 percent over year-earlier levels.  Industrial
production may climb about 10 percent in 1994, and the capacity
utilization rate in factories exceeds 80 percent.  The
expansion is investment-led, as the large conglomerates
implement ambitious plans to modernize and expand facilities. 
Exports, aided by the strength of the yen, remain brisk in
1994, although imports are even more buoyant.  Imports from the
United States are growing at double-digit rates.  Consumption
spending, which accounts for over half of total GDP, is rising
along with optimism about the economy.  Real GDP growth, which
averaged 5.5 percent in 1993, will exceed 7 percent in 1994.

    Despite faster growth, the economy displays few signs of
overheating.  Consumer prices jumped 3.3 percent between
December 1993 and March 1994 due to food product shortages and
public service tariff hikes, but inflation has since
moderated.  To forestall serious inflation, the Bank of Korea
intends to hold money supply growth toward the bottom of its
14 to 17 percent target range in the latter half of 1994.

    ROKG macroeconomic policy was lauded in a 1994 OECD review
of the Korean economy.  Government spending and taxes as a
share of GNP, as well as the fiscal deficit, are low by
international standards.  Moreover, the quality of public
expenditure is high, with an emphasis on education and public
works rather than transfer payments.  The national savings rate
has climbed dramatically since the ROKG made inflation control
a priority in the early 1980s, and now roughly equals the gross
investment ratio at about one third of GNP.

    At the microeconomic level, however, government
intervention is extensive and costly in terms of economic
efficiency.  The prices of many products are de facto
controlled.  The ROKG allocates credit according to firm size
and must approve all bond and stock issuances.  Most overseas
capital transactions are tightly controlled.  Investment and
product safety regulations inhibit domestic competition and
discriminate against foreigners.  ROKG task forces have been
commissioned to rid the economy of obstructive and redundant 
regulations, but thus far progress has been marginal.


2.  Exchange Rate Policies

    The won has appreciated against the dollar by about one
percent between January and October 1994.  On the other hand, a
sharp fall in the external value of the won against the yen has
given Korean heavy industries price advantages over their
Japanese rivals.

    The U.S. Treasury has reported to the U.S. Congress that it
finds no evidence of direct exchange rate manipulation by the
Korean authorities to gain competitive advantage.  However,
Treasury noted that stringent foreign exchange and capital
controls distort trade and investment flows and frustrate the
emergence of a truly market-determined exchange rate.


3.  Structural Policies

    South Korea's economy is based on private ownership of the
means of production and distribution.  The government, however,
has actively intervened in the South Korean economy through low
interest "policy loans," and discretionary enforcement of
regulatory policies.  This has resulted in a high degree of
concentration of capital and industrial output in a small
number of large business conglomerates, or "chaebols."  The
most recent Korean government estimates indicate that the
30 largest chaebols account for 45 percent of the total capital
of the domestic financial sector, and 28 percent of total
manufacturing capacity.  The Korean government uses tax audits
and a tight grip on the financial sector to maintain effective
control over Korean industry.

    Historically, the import regime in Korea was structured to
allow easy entry of raw materials and capital equipment needed
by competitive export industries while consumer imports were
severely restricted.  Since the mid-1980s the Republic of Korea
has eliminated most explicit import prohibitions outside of the
agricultural area.  Many of the problems U.S. exporters now
experience in South Korea are rooted in the maze of regulations
which make up complicated licensing requirements, rules for
inspection and approval of imported goods, country of origin
marking requirements, and other standards often inconsistent
with international norms.

    January 1992 marked the beginning of the Presidents'
Economic Initiative (PEI), a bilateral cooperative effort to
eliminate generic barriers in the areas of standards and
rule-making, customs and import clearance, technology, and
investment.  The PEI lists of recommendations in these three
critical areas built on the results of the 1989 Super 301
Agreements and addressed key doing-business concerns of U.S.
firms.  After more than a year of discussions, the PEI working
groups issued reports on implementation in June 1993. 
Significant progress was made by Korea in carrying out the
recommendations in all areas except investment, but both sides
recognized the need for additional work on generic issues in
general and on investment in particular.  Also, both parties
agreed that the cooperative format had been a success and 
wanted to continue talking.

    In June 1993, the undersecretary-level Economic Subcabinet
launched the Dialogue for Economic Cooperation (DEC), a
year-long intensive effort to address systemic issues of
deregulation and economic cooperation.  The DEC was endorsed by
Presidents Clinton and Kim during their July 1993 meetings in
Seoul.  The DEC established counterpart groups to examine
specific problems in the areas of taxation, administrative
procedures, import clearance, and competition policy, while the
plenary sessions dealt with foreign direct investment issues. 
At the June 1994 Economic Subcabinet meeting, the U.S. side
assessed the DEC as moderately successful.  Both sides agreed
to use the following year to implement the results of the DEC,
including continued meetings of the counterpart groups.


4.  Debt Management Policies

    Foreign debt management is no longer a critical issue for
the ROKG.  Korea's gross foreign debt will total an estimated
$46 billion by the end of 1994, while debt service as a share
of goods and service exports is around six percent.  Net
foreign debt, taking into account Korea's numerous overseas
assets, is approximately $10 billion.

    In 1995 the Republic of Korea will graduate from its status
as a World Bank loan recipient.  In September 1991 the
government formally filed a graduation plan which included a
four-year phaseout period agreed upon with World Bank officials.


5.  Significant Barriers to U.S. Exports

    Formal barriers to imports have fallen, although Korea has
raised new, more subtle, secondary barriers that effectively
prevent the widespread liberalization envisioned under the
major trade initiatives of the late 1980s.  A five-year tariff
reduction plan ended in 1994, when Korean tariff rates averaged
7.9 percent.  As part of the Uruguay Round settlement, the
government will continue to reduce tariffs.  However, the
"tariffication" of some agricultural items formerly subject to
quotas may keep the average tariff rate high by international
comparison.  Korea ratified the Uruguay Round agreements and
became a founding member of the World Trade Organization (WTO)
on January 1, 1995.

    Korean safeguard regulations permit the government to
impose special "emergency tariffs" of up to 100 percent on
imported goods to protect domestic industry.  Seoul also uses
"adjustment tariffs" to cushion the impact of liberalization of
import restrictions.  In 1993 Korea removed canned pork from
the list of U.S. products affected by emergency tariffs. 
Batteries and glass products remain on the list.

    One of the most pervasive remaining formal barriers to U.S.
exports to Korea is the restriction on the ability to import on
credit.  Use of limited deferred payment terms (generally 60-90
days) is restricted to items with a tariff of ten percent or
less, which are generally raw materials.  Use of deferred
payment terms for other goods requires a license from the 
Foreign Exchange Bank and permission from the Governor of the
Bank of Korea; permission is rarely granted.  U.S. firms
estimate that they could increase exports by up to one third if
Korean firms were allowed to buy on credit.

    Licenses are required for all imports to Korea, but they
are usually granted automatically, except for prohibited or
regulated goods.  These goods now include around 150 mostly
agricultural products.  Under Korea's agreement to phase out
its GATT balance of payments (BOP) restrictions, the government
is committed progressively to eliminate most of these import
restrictions by 1997.  In April 1994, the government
reconfirmed this commitment and added a number of key items as
part of the Uruguay Round agreements; some of the items will
not be liberalized until the year 2000.

    Korea agreed in the Uruguay Round to eliminate balance of
payments restrictions on beef by December 31, 2000.  A July
1993 U.S.- Korea bilateral beef agreement outlines minimum
market access levels for 1993 through 1995.  Under this
agreement, operation of the current
"simultaneous-buy-sell-system" (SBS) portion of the market will
be greatly improved by the prohibition of the active
involvement of the Korean government.  The number of SBS
participants will also increase during the course of the
agreement to include non-tourist hotels, meat processors, and
many supermarkets, as well as the tourist hotels and others who
currently have access to the system.

    Standards, licensing, registration, and certification
requirements effectively limit U.S. exporters' access to the
Korean market.  Unreasonably tough and arbitrarily-enforced
standards and labelling requirements have adversely affected
U.S. exports of a wide variety of consumer products, including
appliances and electronic equipment.  Registration requirements
for products such as chemicals and cosmetics hamper entry into
the market and often require U.S. firms to release detailed
proprietary information on the composition of their products.

    Effective January 1, 1993, a Prime Ministerial Decree
outlined improved procedures for standards and rules-making,
including a requirement for public notice, minimum comment
periods, and an adjustment period prior to implementation. 
However, the decree does not have the force of law.  The
government plans to introduce a full-fledged Administrative
Procedures Act in 1995.  Administrative procedures were one of
the principal topics of discussion in the DEC.  The United
States hopes to influence the plans for the Administrative
Procedures Act and has commented on intermediate regulations.

    The Korean government has begun to implement a five-year
program of financial sector reforms, announced in May 1993, to
reduce controls on banks and other financial institutions. 
Measures taken to date include the lifting of many controls on
interest rates, removing documentation requirements on most
forward foreign exchange contracts, and easing slightly foreign
banks' access to won currency funding.  However, under the
timetable for reform some critical measures, such as full won
convertibility and freedom of capital movements, are not
scheduled to be achieved until 1997.  Moreover, in a number of
areas government restrictions continue to deny national 
treatment to foreign banks and securities firms.  For example,
foreign banks face significant impediments in the form of a
variety of funding and lending limits tied to local branch (as
opposed to global) capital, difficulties in obtaining approval
for new financial products, and requirements to capitalize each
sub-branch separately.  Foreign securities firms must meet
extremely high capital requirements and may not place orders
for foreign securities on behalf of Korean clients.

    Changes in regulations announced in June 1994 resulted in a
streamlining of foreign investment applications procedures and
the easing of a number of barriers to direct foreign
investment.  At the same time the government announced
accelerated opening of several sectors that had previously been
closed to foreign investors.  Earlier changes to laws and
regulations governing foreign purchases of land made it easier
for foreign-invested companies to purchase land for staff
housing and business purposes.

    Despite these improvements, U.S. investment in Korea
continue to face a number of significant barriers. 
Restrictions on access to offshore funding, including offshore
borrowing, intracompany transfers, and intercompany loans are
particularly burdensome for foreign-invested companies. 
Foreign equity participation requirements remain in some
sectors, and licensing requirements, economic needs tests, and
other regulatory restrictions limit foreign investment in
sectors that are nominally open to foreign investors. 
Investment in most professional services remains restricted for
foreign firms.  Downstream services by foreign firms remain
restricted.  Retail distribution by foreign-invested firms, for
example, is subject to limits on the number of outlets and
floor spaces.  These restrictions will not be lifted until 1996.

    The government has done little to educate a public
accustomed to a closed domestic market on the benefits of
imports, particularly to consumers.  Most Koreans have been
taught that imports are, by definition, luxury goods.  The
government has encouraged regular "frugality campaigns" against
"over-consumption" that hit consumer imports particularly
hard.  Domestic industry often puts pressure on the government
to use its authority against foreign companies.  In 1993, for
example, foreign firms in the recently-liberalized cosmetics
sector simultaneously underwent customs valuation audits and
investigation of their import procedures.  Numerous press
articles negatively highlighted the increase in sales of
foreign cosmetics and the amount of floor space devoted to
their display by department stores.  Such reports continue to
appear sporadically in the press, along with news that tax
offices will audit individuals who travel excessively abroad or
spend too much on "luxury goods," such as imported automobiles.

    The streamlining of Korea's complex import clearance
procedures is an important U.S. policy objective.  Korea is now
implementing PEI and DEC recommendations for improvement of
customs and import clearance procedures.  A new customs
subgroup has been established to deal with the long-term
implementation of improvements in the Korean import clearance
system.

    Korea has agreed to join the new GATT Government 
Procurement Code.  For Korea, the Code will be effective
January 1, 1997.


6.  Export Subsidies Policies:

    Since the early 1960s, Korea has eliminated several
indirect export subsidies, including the special depreciation
allowance for large exporting firms and overseas construction
firms.  In 1988, Korea terminated the provision of export loans
to large firms not affiliated with business conglomerates. 
However, in response to Korea's growing trade deficits, the
government resumed the provision of short-term export loans to
large exporting firms in April 1992.

    This measure was added to existing programs of support for
Korea's export industries, including customs duty rebates for
raw material imports used in the production of exports; short
term export loans for small and medium sized firms; rebates on
the value-added tax (VAT) and a special consumption tax for
export products; corporate income tax benefits for costs
related to the promotion of overseas markets; unit export
financial loans; and special depreciation allowances for small
and medium exporters.  Korea also maintains a special loan
program for small and medium business to facilitate exports to
Japan as a measure to curb its bilateral trade deficit with
that country.  Export subsidies to the shipbuilding industry
are within OECD guidelines.  Korea is a signatory to the GATT
code on subsidies and countervailing duties.


7.  Protection of U.S. Intellectual Property:

    In February 1993, Korea launched a new comprehensive plan
to strengthen intellectual property rights (IPR) protection and
the enforcement of IPR laws.  The so-called special enforcement
program was originally scheduled to run three months, but was
later extended to ten months.  It included the establishment of
an information network on cases and twice-weekly raids on
markets where counterfeit goods were prevalent.  Key trouble
areas, such as the electronics markets in Seoul and Pusan, were
targeted more often.  Korean authorities gave high priority to
the prosecution of IPR-related cases.  For the first time, IPR
offenders routinely spent time in jail and paid fines.  The
government also announced plans to increase the penalties for
copyright infringement and to amend the customs law to
strengthen IPR enforcement for imports and exports of copyright
and trademark goods.  The government has continued this
campaign into late 1994, dedicating extra budgetary resources
and sponsoring public awareness seminars.

    As a result of this concentrated push, the U.S. government,
in its 1993 and 1994 special 301 reviews, elected not to
upgrade Korea to "priority foreign country" status, but kept it
on the "priority watch list" with the possibility of further
"out-of-cycle" reviews.  The American business community,
encouraged by the new signs of a serious approach to IPR by the
Korean government, supported the U.S. government's decision.

    Patents:  Patents are one area that the new campaign has
not affected.  While Korea's patent laws are satisfactory, the
actual extent of patent protection in Korea depends on judicial
interpretation.  Problems include a lack of discovery
procedures, limits on the use of the "doctrine of equivalents,"
and a determination that "improvement patents" (whether
patentable or not) do not infringe on the pioneer patent. 
Existing laws on compulsory licensing pose problems for some
U.S. firms because they specify that a patent can be subject to
compulsory licensing if the patent is not worked.

    Trademarks:  Trademark violations typically have been the
most visible area of infringement and were the prime target of
the 1993 crackdown, particularly since Korean law allows
prosecutors or police to investigate trademark infringement
cases without the filing of a formal complaint.  Problems
remain with the definition of "famous marks" in Korea.  Reviews
by the Korean authorities charged with deciding whether a
trademark has famous mark status have resulted in inconsistent
decisions.  Three dimensional characters still have no
protection at all.

    Copyrights:  Korea and the United States established
copyright relations when Korea joined the Universal Copyright
Convention in 1987.  Korean government administrative measures
outlined in the 1986 United States-Korea IPR agreement were
intended to provide retroactive protection for books
copyrighted from 1977 to 1987, software copyrighted from 1962
to 1985, and all pre-1987 sound and video recordings.

    Following the 1986 agreement, Korea had some immediate
success in curbing pirating activities, particularly in the
area of printed materials, through the use of tax and trademark
infringement laws.  However, until the advent of the 1993
special enforcement campaign, relatively little attention was
given to the problem of piracy in the area of sound
recordings.  One of the chief successes of the new IPR regime
has been the establishment of a mechanism for reviewing
registration applications that tracks the ownership of both
pre- and post-1987 works.  The continued effective management
of the registration system for these works -- and follow up in
order to destroy illegally-produced or imported copies -- will
be key concerns in future evaluations of Korea's IPR regime.

    Software piracy continues to be widespread.  The Korean
authorities have conducted raids on retailers and wholesalers,
but have given relatively low priority to large end-users.  The
few raids that have been conducted on training schools and
other end-users have sparked significant purchase orders to
legitimate vendors.  In 1994, the government sponsored a series
of public seminars on the importance of copyright protection
for software, and the number of raids and arrests continued to
rise.

    Korea agreed in 1993 to extend copyright protection to
textile designs.  Korean officials began to work with local
textile manufacturers to develop mechanisms for tracking rights
ownership and protecting Korean producers from liability.

    A key complaint of U.S. firms is that Korean law does not
permit the prosecutor or the police to undertake an
investigation of alleged copyright infringement unless a formal
complaint has been filed.  U.S. firms maintain that this 
requirement causes delays which allow the alleged violator to
remove evidence from the premises before the authorities
arrive.  U.S. companies have welcomed the proposal to
significantly increase the penalties for copyright
infringement.  The Korean government currently has no plans to
change its complaint requirement.

    New technologies:  In November 1992, the National Assembly
passed legislation to extend IPR protection to semiconductor
mask works.  If the Korean law becomes compatible with U.S.
law, Korea could seek reciprocal protection for its chips under
U.S. law, provided it demonstrates that no "unauthorized
duplication" is occurring.  The Korean government has been very
responsive to U.S. government suggestions on how the law and
its implementing regulations should be changed to make its
compulsory licensing provisions acceptable to U.S. industry.

    Legislation to protect trade secrets took effect in
December 1992.  A Prime Ministerial decree effective January 1,
1993 mandates the handling of trade secrets, including business
confidential information, in such a manner that legitimate
commercial interests are protected.  In 1992, the Korean
government enacted new legislation to regulate cable
television.  The U.S. government views the legislation with
concern because certain provisions may inhibit market access
for U.S. firms.

    Korea is a party to the Paris Convention for the Protection
of Industrial Property, the Patent Cooperation Treaty, the
Universal Copyright Convention, the Geneva Phonograms
Convention, and is a member of the World Intellectual Property
Organization.  In November 1992, the National Assembly ratified
the United States - Korea Patent Secrecy Agreement signed in
January 1992.


8.  Worker Rights

    a.  Right of Association

    The Constitution gives workers, with the exception of most
public service employees and teachers, the right to free
association.  There are, however, blue collar public sector
unions in railways, telecommunications, the postal system, and
the national medical center.  The trade union law specifies
that only one union is permitted at each place of work, and all
unions are required to notify the authorities when formed or
dissolved.

    In the past the government did not formally recognize labor
federations which were not part of, nor affiliated with, the
country's legally recognized labor confederation -- the
Federation of Korean Trade Unions (FKTU).  In 1993, however,
the Labor Ministry officially recognized independent white
collar federations representing hospital workers, journalists,
financial workers, and white collar employees in construction
companies and government research institutes.  In practice,
labor federations not formally recognized by the Labor Ministry
existed and worked without government interference, except if
the authorities considered their involvement in labor disputes
harmful to the nation.

No minimum number of members is required to form a union,
and unions may be formed without a vote of the full,
prospective membership.  Korea's election and labor laws forbid
unions from donating money to political parties or
participating in election campaigns.  However, trade unionists
have circumvented the ban by temporarily resigning their union
posts and running for office on the ticket of a political party
or as an independent.

    Strikes are prohibited in government agencies, state-run
enterprises, and defense industries.  By law, enterprises in
public interest sectors such as public transportation,
utilities, public health, banking, broadcasting, and
communications must submit to government-ordered arbitration in
lieu of striking.  The Labor Dispute Adjustment Act requires
unions to notify the Ministry of Labor of their intention to
strike and mandates a ten day cooling-off period before a
strike may legally begin.  Overall membership in Korean labor
unions has been declining over the last several years largely
because the explosion in labor organizing in 1987-89 left the
movement divided but well compensated, and worker rights
significantly improved.

    Since July 1991, South Korea has been suspended from U.S.
Overseas Private Investment Corporation (OPIC) insurance
programs because of the limits placed on the freedom of
association and other worker rights.

    b.  Right To Organize and Bargain Collectively

    The Constitution and the Trade Union Law guarantee the
autonomous right of workers to enjoy collective bargaining and
collective action.  Although the Trade Union Law is ambiguous,
the authorities, backed up by the courts, have ruled that union
members cannot reject collective bargaining agreements (CBAS)
signed by management and labor negotiators.  Nonetheless, union
members continue to reject CBAS agreed to by labor and
management negotiators.  Extensive collective bargaining is
practiced.  Korea's labor laws do not extend the right to
bargain collectively to government employees, including
employees of state or publicly run enterprises and defense
industries.

    Korea has no independent system of labor courts.  The
Central and Local Labor Commissions form a semiautonomous
agency of the Ministry of Labor that adjudicates disputes in
accordance with the Labor Dispute Adjustment Law.  The Law
authorizes labor commissions to start conciliation and
mediation of labor disputes after, not before, negotiations
breakdown and the two sides are locked into their positions. 
Labor-management antagonism remains a serious problem, and some
major employers remain strongly anti-union.

    c.  Prohibition of Forced or Compulsory Labor

    The Constitution provides that no person shall be punished,
placed under preventive restrictions, or subjected to
involuntary labor, except as provided by law and through lawful
procedures.  Forced or compulsory labor is not condoned by the
government.

    d.  Minimum Age for Employment of Children

    The Labor Standards Law prohibits the employment of persons
under the age of 13 without a special employment certificate
from the Ministry of Labor.  Because education is compulsory
until the age of 13, few special employment certificates are
issued for full-time employment.  Some children are allowed to
do part-time jobs such as selling newspapers.  In order to gain
employment, children under 18 must have written approval from
their parents or guardians.  Employers may require minors to
work only a reduced number of overtime hours and are prohibited
from employing them at night without special permission from
the Ministry of Labor.

    e.  Acceptable Conditions of Work

    Korea implemented a minimum wage law in 1988.  The minimum
wage level is reviewed annually.  Companies with fewer than ten
employees are exempt from this law, but, due to tight labor
markets, most firms pay wages well above the minimum levels. 
The Labor Standards and Industrial Safety and Health Laws
provide for a maximum 56-hour workweek, and a 24-hour rest
period each week.  Amendments to the Labor Standards Law passed
in March 1989 brought the maximum regular workweek down to 44
hours, but such rules are sometimes ignored, especially by
small firms.

    The government sets health and safety standards, but South
Korea suffers from unusually high accident rates.  The Ministry
of Labor employs few inspectors, and its standards are not
effectively enforced.

    f.  Rights in Sectors with U.S. Investment

    U.S. investment in Korea is concentrated in petroleum,
chemicals and related products, transportation equipment,
processed food, and to a lesser degree, electric and electronic
manufacturing.  Workers in these industrial sectors enjoy the
same legal rights of association and collective bargaining as
workers in other industries.  Manpower shortages are forcing
labor-intensive industries to improve wages and working
conditions, or move offshore.  Working conditions at U.S.-owned
plants are for the most part better than at Korean plants.



  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
                                                                
              Category                          Amount          

Petroleum                                                74
Total Manufacturing                                   1,236
  Food & Kindred Products                   268
  Chemicals and Allied Products             212
  Metals, Primary & Fabricated               50
  Machinery, except Electrical               39
  Electric & Electronic Equipment           186
  Transportation Equipment                   59
  Other Manufacturing                       422
Wholesale Trade                                         245
Banking                                               1,231
Finance/Insurance/Real Estate                           169
Services                                                 24
Other Industries                                         23
TOTAL ALL INDUSTRIES                                  3,001   

Source: U.S. Department of Commerce, Bureau of Economic
Analysis

(###)


To the top of this page