South Korean strike hits economy

The South Korean army has moved in to ship containers

South Korea's government has warned the strike at its southern port of Pusan has cost the country $450m (£279m) in lost or delayed exports so far.

The Ministry of Commerce, Industry and Energy said the port was now running at 47% of capacity, up 15% from Tuesday, after the government deployed military staff to help move goods.

But companies including Samsung electronics, the world's biggest maker of computer memory chips, have warned they are suffering major losses because of the strike.

Reports have suggested up to 5,000 lorry drivers are on strike in Pusan, the world's third largest container port, and the smaller port of Kwangyang.

Talks between drivers' unions and the authorities are due to being on Friday.

Economic woes

The lorry drivers are demanding higher pay, a cut in taxes, as well as other benefits such as lower motorway tolls.

The port came to a virtual standstill six days ago as the strike started and Prime Minister Goh Kun has expressed worries about the fallout on an already slowing economy.

Weak local demand, the Sars virus and North Korea's suspected nuclear weapons programme are all affecting the economy.

South Korean chemical makers export about half their products and the strike is costing them more than $16m a day according to the Korea Petrochemical Industry Association (KPIA).

"Pusan and Kwangyang have been hit hardest, but exporting through other ports is not easy at the moment because they cannot secure containers as most of them are stuck in the two ports, " said Kim Pyong-joong, a KPIA official.

'Meaningful message'

The government has taken an unusually tough line, calling the strike illegal and sending in troops to move freight.

Defence Ministry officials said they had sent an additional 20 tractor-trailer lorries as well as 40 soldiers to Pusan on Wednesday.

Analysts supported the government's decision.

"The labour-friendly government has toughened its stance which is sending a strong and meaningful message to other unions which may be planning strikes," said Lee Sang-jae, an economist at Hyundai Securities.