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Sat, Aug 02, 2003 - Page 12 News List

Labor strikes damaging to South Korean growth

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South Korean export growth eased last month and will probably slow further this month as strikes hamper production at companies such as Hyundai Motor Co and LG Chem Ltd, the government said.

Overseas sales rose 16 percent from a year earlier to US$15.5 billion last month after increasing 22 percent in June, the commerce ministry said in a statement in Seoul. Imports grew 14 percent.

"Export growth in August is forecast to slow due to unstable labor-management relations," the ministry said.

"Imports will also slow because of a local economic slowdown."

Strikes are preventing South Korean exporters taking full advantage of a rebound in consumer spending in Asia since theSARS epidemic ended. The government is relying on exports to help revive the economy, which it says slipped into recession in the second quarter.

Asian consumers have been buying more cell phones, cars and computers since the last cases of SARS, a virus that killed 813 people, were isolated in June. China, Hong Kong and Taiwan, the three worst-infected places, buy about a quarter of South Korea's exports. Retail sales in China grew 8.3 percent in June, double the pace at the height of the epidemic in May.

"Labor strikes are keeping exports from rising further at a crucial time when Korea depends on overseas shipments to drive economic growth," said Choi Hyoung Jun, an economist at Dongwon Securities Co in Seoul.

Car exports probably dropped a fifth last month because of a month-long strike at Hyundai Motor, South Korea's largest automaker, the ministry said. Cars account for about a 10th of the nation's overseas sales.

Hyundai said yesterday exports of Grandeur XG sedans, Santa Fe sport-utility and other vehicles fell 17 percent between July 16 and July 27 because of a strike.

"The strike is hurting our sales at both home and overseas," said Jake Jang, a Hyundai Motor spokesman. "We're getting a lot of complaints from our customers because we can't make deliveries on time."

Customers have to wait as much as 50 days to get their cars delivered because of the strike.

Hyundai's unionized workers have refused to work overtime since June 20 and staged sporadic walkouts since June 25, causing the automaker to lose production of more than 99,210 Sonata sedans, Santa Fe sport-utility vehicles and other models worth 1.3 trillion won (US$1.1 billion).

LG Chem Ltd, South Korea's biggest chemicals maker, said on July 14 a strike by workers seeking higher pay was costing it about 10 billion won a day in lost sales.

Chip exports in July rose an estimated 14 percent, while mobile phone exports surged 56 percent, the ministry said.

Exports to China jumped 45 percent in the first 20 days of last month, while shipments to the US fell 6.8 percent, the report showed.

South Korean imports totaled US$14.9 billion last month, leaving a trade surplus of US$666 million for the month.

The government last month estimated South Korea's economy shrank 0.5 percent in the second quarter from the first, following a 0.4 percent contraction in the first three months of the year.

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