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Friday, October 15, 1999 Published at 10:13 GMT 11:13 UK

Business: The Economy

Korean unions to sue IMF

The unions claim that IMF policies forced many Koreans out of a job

Korean unions plan to sue the International Monetary Fund (IMF) for damages on behalf of workers who lost their jobs as a result of IMF policy.

This is the first time the IMF has been sued by labour unions within a country it gave emergency aid to.

The Korean Federation of Bank and Financial Labour Unions has filed the lawsuit with the Seoul District Court.

[ image: Korea spent its reserves shoring up the won]
Korea spent its reserves shoring up the won
"The purpose of the lawsuit is to prove the failure of the IMF bailout programme for South Korea and many global non-governmental organisations are supporting our stance," the union said.

South Korea received a $57bn aid package from the IMF in December 1997 on condition of implementing an austerity programme.

IMF austerity programme

The unions blame the IMF's austerity programme, which had forced interest rates higher, for creating a "chain of bankruptcy, even in sound businesses."

They demand 480m won ( $400,000) in compensation on behalf of 12 workers who were dismissed.

The union's lawyers Pak Chang-Wu admits that proving the plaintiffs incurred damages from erroneous IMF policies will be the critical point of the case.

"It is not a big amount, but this is a symbolic gesture to criticise and protest the IMF's wrong policy," Mr Ha Ik-Jun, of the Korean Federation of Bank and Financial Labour Unions said.

The IMF has already admitted that it under-estimated the scale of the Asian crisis, and in some cases, such as Indonesia, insisted on tough policies for too long.

Its actions have also drawn criticism by unions in other countries with IMF programmes such as Brazil.

One-time tiger

When Korea received the IMF money, the country's economy was then in crisis, with its currency crippled by speculators who had lost faith in the Asian tiger.

South Korea's jobless rate reached a record 8.7% in February, its highest levels in 33 years, but has declined to reach 5.7% in August.

The one-time tiger is now the country that shows the clearest signs of recovery from the Asian crisis.

But tackling the grip of Korea's big conglomerates, the chaebols, has proved difficult. The government did grasp the nettle of corporate reform and forced some chaebol to merge or close their debt-laden subsidies.

But militant unions have forced many chaebols to withdraw plans to lay-off workers in order to consolidate.

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