In South Korea the government, trade unions and managers have agreed to introduce new laws that will pave the way for mass redundancies.

As many as a million workers could be laid off in coming months.

The decision is another step in the country's attempt to deal with its financial crisis. Officials have welcomed it as a grand national compromise".

The South Korean currency has roughly halved in value in the last 6 months

It is viewed as vital to restoring foreign investor confidence in the Asian nation's crumbling economy.

If the deal had not been agreed the reform programme, demanded by the International Monetary Fund as a condition of its loan of $57bn (£35bn), would have been under threat.

The agreement is a boost for the incoming administration under the veteran opposition leader Kim Dae-Jung.

The unions finally agreed to the new laws, which allow troubled businesses to lay off workers, after weeks of negotiation.

In return, the government will lift restrictions on union activity, increase unemployment benefits and, for the first time, teachers will be permitted to form a union.

The new Bill is expected to be passed by parliament next week.

In the past it has proved extremely difficult for employers to dismiss workers, even in times of economic hardship.

The unions had threatened strikes and mass protests if the government had pushed through the new labour laws without their consent.

Last year the unions paralysed industry for several weeks in a battle against an earlier attempt to introduce redundancies.

The economic crisis of recent months has helped convince the labour movement that much higher levels of unemployment are inevitable.

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