Asian crisis helped make Private Sector stable

Dr. Young Vae Kim, Managing Director, Korea Employers Federation gave the keynote address at the Tripartite Conference on Labour Management Co-operation in Colombo recently.

In an interview with Dinesh Weerakkody, Dr. Kim explained how labour management operated in the Asian Tiger economy.

What would you say are the benefits of sound labour-management relations?

Labour-management co-operation has resulted in the improvement of quality of working life such as wage increases, increase in the number of workers owning houses and increase in savings. The trade union’s co-operation such as permanent no-strike declaration and conclusion of collective bargaining without negotiations have led to mutual benefits for labour and management. For example in 1988, a wage freeze was carried out. The trade unions returned 50% of union fees to union members. In return the management pledged to do its best for employment security.

What is the strategey used by the Korean government to promote labour-management cooperation?
Beginning of this year, the government launched a tripartite commission composed of employers, workers and government to discuss issues that are affecting the unions and employers, particularly this commission fell under the purview of the Presidential office, therefore all the decisions taken in this committee had the backing of the presidential secretariat. As a result the workers concerns, which were mainly based on political and social aspects, got addressed and this resulted in stable labour relations. The government knows how important it is to have a stable industrial base. Therefore every effort is being made to ensure that this prevails.

Do the unions generally agitate and oppose government policy?
Without strong leadership from the Union Leaders we cannot expect any result even though it provides a direct benefit to the employees. In Korea, most of the union leaders are very conscious about other unions that are affiliated to the other national organizations thinking that they may not get the support to push through a demand. Therefore union representatives will not sign an agreement, even if it is in favour of the employers proposals, before passing the interim-result to a nation wide member ratification vote.

This is only one example. Within a union, there are many groups and branches, as a result negotiation takes months to conclude and due to this decision making in enterprises are hampered.

You spoke about a Worker Participation and cooperation act, What are the areas that fall under the purview of this Act?
The establishment of works council has been enforced by law in Korea in 1970 and the relevant act was revised into the Act concerning the promotion of worker participation and cooperation in 1997. Usually issues relating to working conditions and wage are carried out through collective bargaining. But issues, which need workers responsibility employer commitment such as welfare’ training, stock ownership etc. are enforced through the works council. In general, trade unions have little confidence in obligatory systems enforced by law.

How popular is the works council as a vehicle to promote labour-management cooperation?
In Korea, unions are negative towards the workers council because they think it would weaken the collective bargaining power of the unions. Although radical unions try to solve all their problems through collective bargaining, some unions regard the works council as a useful mechanism to discuss and settle many issues. Most companies which have stable labour management relations actively utilise the works council, which is obligatory by law.

How would you as an employer representative define a Korean union?
Simply put severe rivalism. Politically motivated and limited experience working with employers.

Is it true that your labour is relatively indicipline when compared with the Japanese worker due to union influence?

In Korea we have two national Unions. One of them is FKTU (Federation of Korean Trade Unions) and the other is KVTC (Korean Trade Union Congress). The second Union, which was founded after 1989 with the strong support of college students, has not shown us that they can regulate their affairs in the best of the country. The economic crisis however have now compelled them to regulate their action in a more organized way. In major companies, it is very rare to find a stable period once a union leader is inducted. As a result our work ethic has almost collapsed due to the strong labour movement. But recently, due to the crisis the new lay-off scheme introduced has had a positive impact on the worker. Therefore, one can expect many positive changes in this area in the near future.

Do you have a national fund for skills development?

During the period from 1974 to 1996, our training levy system have applied to individual companies. The companies, that did not train their workers with the numbers allocated by the government, had to pay some amount of money ( 0.6% of total labour cost multiplied by allocated numbers for small companies and 1.5% of total labour cost multiplied by certain number allocated for big company). By using this money, which had been collected around I billion dollars, the government got the nation’s manpower training center to train workers in all the areas in which skill shortages existed . This training was demand driven.

You spoke about the 100-PPM quality innovation campaign and how it has benefited Korea by way of better labour management cooperation. Please explain

Comparing to other issues, unions are relatively supportive when it comes to quality problem. The 100 PPM quality innovation campaign have had an indirect effect of facilitating labour-management co-operation. Because of its concern for human dignity, the zero accident campaign can easily induce active co-operation from the trade unions. In order to lower accident rates, the campaign should be preceded by organization of the working environment, and the establishment of labour discipline and order within the work place. Such co-operation has led to improved productivity in the work places.

Has the Asian currency crisis severely affected the progress of the Korean private sector?

Yes it has, however. This crisis helped us to pull back our private sector on to a more stable route, this not only contained the workers excessive expectations and demands but also the unions irresponsible behaviour. Today, all the Korean companies are concentrating on process improvements to regain their international competitiveness.

Indian guru to conduct workshop on leasing & Hire Purchase

A two-day workshop on Leasing and Hire Purchase will be held tomorrow and 13th November 1998 at The Maharaja Auditorium, 146, Dawson Street, Colombo 2. This workshop organised by Maharaja Institute of Management (MIM) is the third in a series of workshops on finance.

The facilitator will be Vinod Kothari who is among the world’s top leasing experts and is the only author of a comprehensive treatise on the subject from Asia. Over last 12 years, he has gained acceptability as an author and educator. Having lectured in India for last 11 years, Vinod Kothari made a debut before an international audience in 1997 when he addressed the Asian Leasing Convention in Mumbai.

He is a Chartered Accountant and a Company Secretary with a brilliant academic record. Vinod Kothari was the author of the first Indian treatise on Leasing in 1985. His book Lease Financing and Hire-purchase, now in 4th edition, is regarded as the most authentic text on the subject in India, and is widely read in Pakistan, Bangladesh, Sri Lanka, Indonesia and Philippines. The January-Feb 1998 issue of the Monitor, USA carried one of his many articles as the lead cover story. He is also one of the specialist editors of Ramaiya’s Company Law.

Over the last 11 years, Vinod Kothari has conducted training sessions for State Bank of India, Canara Bank, HDFC, Kotak Mahindra Finance, Tata Finance, Industrial Finance Corporation of India, etc. He is the Director of Association of Leasing and Financial Services Cos., a body of over 500 top leasing companies in India.

Vinod Kothari was a Visiting Faculty at Indian Institute of Management, Calcutta for 4 years and taught Taxation in Business Finance.

The objectives of this programme are:

• To provide, in easy-to-understand, yet comprehensive manner, a basic conceptual understanding of the whole gamut of leasing, hire-purchase and asset-financing products and the developments across the horizon’ such as operating leases

• To provide comprehensive inputs on pricing and structuring of leases (including use of computer spreadsheets), legal and documentation issues, taxation, accounting, and internal controls, marketing strategies, etc.

• To deal with the specific nuances of the Sri Lankan market with reference to Goods and Services Tax, leasing law, etc.

Ericsson to break new ground
High speed wireless access to wide band multi-media services
By Shirajiv Sirimane

Ericsson Telecommunication is set to break new ground next year as they will introduce third generation wireless systems to provide high-speed wireless access to wide band multi-media services.

In this regard high-speed Internet access, video conferencing and LAN connections from the mobile terminal will be as natural as making a wireless voice call.

Ericsson Telecommunication Lanka Ltd. hosted a Press conference in this regard and Bo Almlof, Managing Director said that due to the increased speed of their proposed expansions telephone bills will have a significant reduction.

He also said that 64% of the world’s cellular network are operated on GSM and very soon another prominent Sri Lankan celluler network too would go digital (GSM). "Mobile communication as you know it, is about to change. The future speaks of possibilities that would surpass geographical and physical boundaries", he added.

"Ericsson is a world-leading supplier of communications solutions, offering advanced systems and products for wired and wireless communications systems in public and private networks.

"Ericsson’s customers are operators of fixed and mobile communications networks, businesses requiring advanced voice and data communications and end-users of mobile phones and other terminals. Ericsson, has more than 100,000 employees and representation in 130 countries, giving it the world’s largest customer base in the telecommunications field," he explained.

"Ericsson has always concentrated intensely on technical development. Annual investment in technical development in recent years have amounted to about 15 - 20 percent of sales. In 1997 Ericsson invested USD 3.3 billion, equal to 16 percent of total sales, in new technology. This means that Ericsson is investing more than any other company in the industry in systems and products of the future. More than 22,000 employees in 23 countries are active in research and development and in 1997 Ericsson submitted 1,200 new applications for patents," he added.

John Adler, General Manager Ericsson said that during mid next year a special cellular phone would be introduced to enable video conferencing.

"The European Telecommunications Standards Institute (ETSI) In January took its important decision on the future standard for the next generation of mobile communications systems. ETSI has decided to implement a standard based on the WCDMA technology advocated by Ericsson. WCDMA makes it possible to substantially broaden the areas of use of mobile telephony. Internet access and mobile multimedia are examples of applications in which high data transfer capaciity is required in the mobile network. Ericsson delivered the first experimental WCDMA system to Japan," he said.

Ericsson is a major supplier of AXE-10 systems to Sri Lanka Telecom, mobile systems to Mobitel, and WLL (Wireless Local Loop) systems to Suntel. Ericsson Telecommunications Lanka has the overall capability to design and install complete turnkey systems. The wireless penetration rate in Sri Lanka is currently 0.7 per cent.

The Central Bank's Spot Rates for transactions with Commercial Banks announced on the morning of October 27, 1998 were as follows:

The approximate middle exchange rates of following currencies calculated on the basis of cross rates quoted by Gulf International Bank, Bahrain as it appeared in Reuters Financial Information System on November 10, 1998 were as follows:

Average rates at which the following currencies were quoted by Commercial Banks in Colombo for Telegraphic Transfers at mid-day on November 10, 1998 were as follows:

Average Weighted Prime Lending Rate (AWRP) and Lowest Prime Rate (LPR)
The Average Weighted Prime Lending Rate (AWPR) during the week ended November 06th,1998 was 14.7 per cent for all banks. The Lowest Prime Rate among banks during this week was 13.3 per cent.

Average Weighted Deposit Rate of Commercial Banks (AWDR)
The Average Weighted Deposit Rate (AWDR) of Commercial Banks for the month ended October 31st, 1998 was 9.6 percent.