On Friday, October 15, a South Korean trade union became the first anywhere to sue the International Monetary Fund (IMF) for damages caused by the policies it imposes. The IMF will now be called upon to defend, in local court, its demand for mass layoffs in South Korea in the wake of the 1997-98 East Asian financial crisis. The union is also considering taking its claim to the U.N. Commission on Human Rights in Geneva, Switzerland.

Korean union members protest IMF at Taegu Conference
(photo: S. Ambrose)

The Korean Federation of Bank & Financial Labor Unions (KFBU), which represents middle and lower level bank workers, has filed a lawsuit in Seoul district court seeking about $400,000 in damages on behalf of 12 workers laid off as a result of policies demanded by the IMF in connection with its $57 billion "bailout" loans made to South Korea in 1997-98. But the monetary award sought and the number of workers represented are just token figures.

In an October 8 interview in Taegu, South Korea, the President of the KFBU, Lee Yongdeuk, estimated that 40,000 members of his union lost their jobs as a result of the IMF intervention. Lee was in Taegu to address the Taegu Round Global Forum on speculative capital and the international financial institutions.

The purpose of the lawsuit, said Lee, is to demonstrate in a public, legal setting that the IMF overstepped its mandate ˜ monitoring international financial liquidity ˜ and forced disastrous policies on the Korean government that pushed hundreds of thousands of people into economic desperation. The KFBU wants the legal process to educate Koreans about the dangers of dealing with the IMF, and also wants to use the action as a means to reach out to labor activists and others around the world who are fighting the neo-liberal policies imposed by the IMF.

Lee highlighted specifically the IMF‚s inflexibility in demanding mass layoffs and bank closures. He also criticized its insistence on high interest rates and the sudden opening of Korean markets to foreign businesses, as well as the IMF‚s practice of letting local businesses go bankrupt while "bailing out" foreign enterprises.

While acknowledging that the Korean banking industry had some internal structural problems, Lee maintains that the mass layoffs of 1998 could have been avoided but for the IMF‚s absolute determination on measuring adherence to its dictates through the number of people fired. Its initial demand was a 50% cut in the number of workers in the banking sector and the closure or merger of ten banks. The KFBU‚s struggle to preserve its members‚ jobs finally succeeded in reducing the first demand to a 30% cut, but such a "victory" obviously brought the union little joy.

Bank workers were not, of course, the only people affected by the financial crisis in South Korea. Lee estimates that while his union saw 30% layoffs, other sectors endured layoffs in the area of 20%. Unemployment in South Korea hit a 33-year high earlier this year, with the official rate hitting over 8%.

With the IMF emphasizing problems in the structure of the Korean financial sector, bank workers suffered the added burden of being blamed by the public for the crisis. Lee points out that the Seoul government was largely responsible for setting the banking sector‚s policies ˜ not just for state-owned institutions, but for private banks as well. It was only with the advent of the financial crisis that Korean bank workers learned about the sometimes-obscure international banking standards that they were suddenly faulted for not meeting. At any rate, few KFBU members, who range from middle management to clerical and janitorial personnel, were in any position to affect bank policy.

As evidence of the IMF‚s incompetence and tendency to over-react, even with thousands of careers on the line, Lee points to the fact that within months of the mass layoffs, almost one-quarter of those who lost their jobs had been hired by banks on a temporary contract basis ˜ an arrangement far preferable to the skeletal unemployment insurance in Korea, but one which offers far less job security than the workers once had. Those workers who did not lose their jobs are now routinely working long overtime hours and suffering dramatically higher rates of on-the-job accidents.

The KFBU lawsuit, filed almost two years after the onset of the financial crisis, reflects the anxiety Korean workers still feel, even though IMF and business analysts say the South Korean economy has turned the corner. Lee was elected President of the KFBU in December after running as a maverick demanding more radical action against the IMF, and credits his victory to an unusual outpouring of grassroots activism within the union. The KFBU has since secured the enthusiastic support of the KFBU‚s international partner, the International Federation of Commercial, Clerical, Professional & Technical Employees (FIET), for the lawsuit.

Since taking office, Lee has met with both local IMF officials and IMF Managing Director Michel Camdessus. He reports asking Camdessus who the institution‚s policies were meant to benefit, and receiving no reply. Lee‚s deduction is that the IMF works on behalf of "speculative global capital," and given that fact, Korean workers remain vulnerable to future financial crises.

The KFBU rallied with 30,000 workers in Seoul in April ˜ a show of strength that has gotten the IMF‚s attention, but no concessions yet. Lee wants the IMF to admit its failures and take responsibility for its action, and very possibly close down. He acknowledges that resolving the matter in the Korean courts may take "many years," but looks forward in the meantime to representing the interests of workers throughout East Asia, as well as those in Africa and Latin America. The KFBU is committed to educating Koreans about the impact of the IMF‚s policies in other parts of the world, and in telling its story as widely as possible.

Several dozen members of the KFBU were present at the Taegu Forum and made contact with activists from around the world gathered there to critique the IMF‚s performance in Asia and elsewhere. Also present were lawyers from New York and Geneva, Switzerland, who are beginning to talk with the KFBU about brining their claim to the United Nations Commission on Human Rights as an instance of the violation of workers‚ economic rights by an international institution. The 50 Years Is Enough Network will keep its members informed about the progression of the case in both the Korean and international courts.

Lee warns that unless the demands of workers like those in the KFBU are met, there will be greater volatility in South Korea, and perhaps around the world. Speaking to a plenary session in Taegu, he issued a call for workers and the excluded around the world to recognize their common interests. "Rapid growth in a single country won‚t benefit anyone" in the long run, he warned. Lee‚s vision is of middle and lower classes around the world working to unite and use their power to overcome the interests of speculative capital, as represented by the IMF ˜ a force similar in many ways to the imperialism Asia and other parts of the global South have struggled against for so many years.