Labor unrest is a seasonal routine in South Korea, but this summer's wave of strife is particularly bad in terms of the number of disputes and their timing, analysts said.
Foreign investors feel that the fragile economy is already suffering enough from slow domestic consumption and other problems without the additional strain of labor confrontation.
Some investors were particularly unnerved at a drawn-out walkout that paralyzed US-controlled KorAm Bank for 18 days and ended only after the management agreed to pay four months' wages as a bonus, the analysts said.
Labor militancy, together with the stand-off over North Korea's nuclear weapons program, are negative factors blamed for the "Korea discount" when investors put money in South Korea, analysts said.
But the ongoing labor disputes could not have come at a worse time for the South Korean market as foreign investors were already cutting the weight they give to South Korean assets in portfolio investment.
"Labor militancy, particularly in service sector, could be a big problem [for the South Korean economy]," said Ben Rudd, a strategist at ABN AMRO in Hong Kong in charge of Taiwan and South Korea.
He noted that there was a big increase in terms of the number of strikes taking place this year, compared with last year.
According to the labor ministry, the number of strikes that have occurred in the first six months to June almost tripled to 337 cases, involving 136,632 workers.
"I am not sure whether it's the government itself ... it may be the labor union feeling, with the new government in place, they can be more vocal," Rudd said of the reasons for the labor disputes.
South Korean experts said the increase in the number of strikes was mainly because a rising number of labor unions are sucked into federation-wide strikes as the unions are being unified under umbrella unions.
"In terms of numbers, it may look bad, but in terms of intensity and fierceness, this year's labor disputes are not so bad as those in the past years," said Lee Joo-Hee, of the state-funded Korea Labor Institute.
She said that the Roh government was taking a tougher stance against striking unions, especially after the latter half of last year when the country's economic slump deepened.
Rudd said one of the reasons for the increase in labor disputes was the hope among labor unions that the Roh government would be more friendly toward them than the past government.
A US investment company analyst, who asked that he and his comapny not be named, said foreign investors were especially alarmed by the strike at KorAm Bank, the longest industrial action ever in South Korea's banking sector.
The strike shut down 80 percent of the 225 branches of the bank, which is owned by Citigroup.
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