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Hit-and-run Korean companies that go unpunished can no longer be overlooked

On March 7th, President Moon brought to light the issue of unpaid wages by an Indonesian Korean company called SKB. He issued a directive ordering ready cooperation with the Indonesian government and that Korean companies in Southeastern countries including Indonesia do not inflict harm on local laborers. We welcome such directive from President Moon since it is the first significant indication from the Korean government that it recognizes human rights violation by Korean companies overseas as a current agenda and that the government would take measures against it. 
Ever since the 1970s when Korean companies started overseas investments, they have been constantly criticized by the international society for iterating in other countries their domestic practices of personnel management resulting in human rights violation. Only after the suffering of countless local community members and overseas workers of Korean companies including SKB were we able have a directive from the president, and even the SKB situation appears difficult to be resolved.

Failure to pay wages and the running away of the owner at SKB is a typical example of what happens in many factories run by Koreans in Southeast Asia. Failure to pay minimum wage as well as forcing laborers to work overtime in poor working conditions such as inadequate bathroom facilities has been repeatedly reported all over the world, yet there has been no real countermeasure. Host countries trying to attract corporate investment have no intention to mitigate the problem while the Korean government has not introduced any regulations on such behavior in the name of protecting its nationals.

Meanwhile, some morally corrupt Korean business owners have continued to run away after having collected their money by crossing borders and leaving their workers behind. A study urgently conducted by a local Indonesian labor organization after the SKB incident alone shows that up to four Korean companies were found to have perpetrated similar practices as of current date in March 2019.

It has been reported that there is a significant number of cases where business owners not only abscond or fail to pay wages but also fail to provide appropriate severance pay and compensation in accordance with the Indonesian law or to pay fair wages and benefits during the process of closing down a factory. These cases are not restricted to Indonesia but can be found in other Southeastern countries as well as Central and South American countries. If we add union suppression and poor working conditions into consideration, these problems rising from Korean-run companies overseas are stark reminders of what we have seen domestically as well.

The international society has been striving to find a solution to the evasion of punishment by First World corporations in developing countries even after they have committed human rights violations. The result of such efforts is the “UN Guiding Principles on Business and Human Rights” published in 2011 and the National Contact Point offices set up by the “OECD Guidelines for Multinational Enterprises”. As a member of the OECD and the UN Human Rights Council, Korea evidently has the duty to take action to prevent human rights violation and guarantee victims their access to relief even for overseas corporate operations. In fact, with growing recognition of human rights violation by Korean companies in the international society, the Korean government has been continuously called on to take action. In this sense, President Moon’s directive is inevitable, and the Korean society should be embarrassed that the government has yet to take any measure despite consistent demands from the international society.

Korean companies should reflect on whether or not they are abiding the law within and outside Korea at the very least, instead of protesting against the government intervention in corporate operations overseas. For instance, according to the Indonesian law, the unpaid wages of SKB laborers amount to 9 billion KRW (9,000,000,000), but the responsible Korean corporate personnel states that they would only pay one month worth of wage, in disregard of the Indonesian law. The current practice of making investments with only cheap labor in mind and then blaming the host country’s law that the legally appropriate compensation is too much once the business starts to fail needs to change. To achieve this, Korean business owners who have run away including the one responsible for SKB should be brought to justice by court at the very least. This is the only way to protect other Korean companies abiding the law, not to mention the workers from being harmed.

The government needs to use the SKB case as a motivation to work out a comprehensive, government-wide solution. It should meet with the local communities in host countries, including the laborers working for Korean companies and listen to their voices. It needs to conduct a research on the current situation of human rights in the overall overseas operations of Korean companies. If it fails to accurately comprehend the problem at hand and offers a Band-Aid solution only to avoid taking the momentary heat, it will continue to be criticized by the international society as the “ugly Korean”.

We demand the following in desperation that the suffering must stop for workers who are endlessly waiting in factories whose owners have run away.

we demand that the Korean government resolves unpaid wage and owner runaway cases in Indonesia including SKB by any means necessary.

we demand that the Korean government conduct a research to respond to human rights violation by Korean companies overseas and develop a countermeasure including a government-wide response system.

we demand that Korean companies investing in foreign countries including Indonesia provide compensation and severance pay as well as fair wages and social security as required by respective host country’s law.

we demand that Korean companies investing in foreign countries including Indonesia follow the international labor standards and standards for human rights protection. In particular, we demand that the companies notify at least the laborers and the local government before closing a business operation or conducting a layoff and that they minimize the impact on the livelihood of the laborers.

March 20 2019

KTNC Watch
Advocates for Public Interest Law APIL, Gonggam Human Rights Law Foundation, Hope and Law (Korean Lawyers for Public Interest and Human Rights), Korean House for International Solidarity, Minbyun – Lawyers for Democratic Society committee on labor, Corporate for All, Korean Confederation of Trade Unions, and Korean Federation for Environmental Movement