Kaesong businessmen languish, wishing they could get back to work

Posted on : 2013-05-18 15:14 KST Modified on : 2019-10-19 20:29 KST
Ongoing stalemate at industrial complex leaves tenant businesses in a lurch, wishing the government would find a solution
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By Lee Jung-hoon, staff reporter

They had lost their jobs, and as soon as they took their seats, they pulled out cigarettes. All of them said they hadn’t been smoking for the past few years. It was after the North Korean workers were withdrawn from the Kaesong Industrial Complex on Apr. 7 that they picked up the habit again.

The three men are branch heads of clothing companies operating in Kaesong: Park Yong-guk, 50, of Green Fabric; Jang Min-chang, 52, of S&G; and Lee Hyeong-ro, 54, of 9JIT. They had remained at Kaesong as long as they could until Apr. 27, when they had no choice but to return to South Korea. Ten days later, on May 7, they met with the Hankyoreh to talk about their experiences at Kaesong.

■ Uncertainty about the Future

These are men in their fifties with families to look after, so the first thing they were worried about was finding a job. At the same time, they were concerned about the co-workers that had returned to South Korea with them.

Jang: Since leaving the complex, I have kept going to work, but there is not really any work for me to do. The nine people who had been working for me at Kaesong are currently waiting for assignments. Things look even bleaker for them.

When I go to work, I organize the orders we have received from our clients and settle their claims. This month, I expect to receive about 70-80% of my normal salary since I only worked at Kaesong for the first week of April. If the current situation drags on much longer, the company will not be able to hold on to the employees.

Lee: Our current situation is more severe. We are not receiving payment for the made-to-order clothing that we have already delivered, and we are not able to manufacture the products that we have received orders for.

Since 2008, the Kaesong Complex was our livelihood, and that livelihood was taken from us in a single day. That doesn’t mean it’s going to be easy to find new work, though - I’m over 50 years old.

Park: Some companies operating at Kaesong had their employees hand in resignations as soon as they were withdrawn from the complex. That’s why, even if the Complex is reopened, it’s unclear who exactly would be working there. Even if everything returns to normal, people will still feel nervous because of the possibility that they might lose their jobs if this sort of problem comes up again.

   

■ The Abrupt Departure

On Apr. 26, the South Korean government announced that it would be withdrawing all of the South Korean workers from Kaesong. There had been no advance notification.

Park: At 6pm, the South Korean government announced that it would be withdrawing workers from the complex. About 25 minutes after that, the Kaesong Industrial District Management Committee (KIDMAC) held a meeting. They recommended that we withdraw, at which point some branch heads said that they wouldn’t leave.

On the morning that we were supposed to leave, these branch heads paid another visit to KIDMAC and said they were staying. But it was no use. KIDMAC had said that the group wouldn’t be leaving until everyone had shown up at the gathering point. Even the companies that were planning to remain at the complex were forced to leave out of consideration for the other companies.

Jang: We had received raw and subsidiary materials from our clients for the items they had asked us to manufacture for them. It seemed to me that looking after those materials was the right thing to do even after factory operations had ceased. Also, I had this idea that by staying in the complex we could give both governments a reason to resolve the situation.

When they urged us to withdraw from the complex, a fair number of company heads resisted. They were frustrated that the government had not recommended the withdrawal but had rather notified them of it after making the decision without them. True, the companies weren’t legally required to return to South Korea, but companies have to think about their relationship with the government, as this can affect their business in the future.

   

■ Inadequate Aid from the Government

When operations were suspended at the Kaesong Complex, the South Korean government and financial institutions promised to offer assistance in the form of emergency funding.

Jang: The entire Korean public thinks that government assistance is coming in the form of compensation for our losses. Just today someone who lives near my office told me that I had nothing to worry about since the government is going to compensate us. Even our buyers say things like that.

But all they’ve done is bought us some time. Banks aren’t just giving the money away, you know. We will have to pay them back a year from now. But there aren’t any factories we can run. It’s like they’re telling us that we have to go bankrupt, but we get to wait a year.

Park: We went into Kaesong because we trusted the investment guarantee agreement, which was based on a treaty signed by North and South. When we left, we were following the directions of the South Korean government. In a situation like this, the government ought to have some kind of contingency plan in place. Even if the complex were to reopen right away, the shops that sell our products are currently closed. We need some kind of support policies, like helping us secure orders with the help of South Korean chaebol or by giving us tax benefits.

Jang: There was one company at the complex that makes a total of 2.4 billion won (US$ 2.15 million) a year in revenue. One of their clients filed for 2 billion won in damages. The client told them to pay up, pointing out that the government was compensating them for all their losses anyway.

Lee: Han Jae-gwon, the chairman of the association of companies at the Kaesong Complex, said that the damages add up to 8 trillion won (US$7.16 billion) if you add in the lost sales. There are no clauses in the contracts with our clients regarding damage compensation for situations such as this. If we are asked to pay not only the original cost of the production but also for lost sales, we’re done for.

I also wished they would change the name. They’re calling it the “special assistance fund.” It’s not an assistance fund- it’s just a loan. And all that we get from it is more requests from our clients to compensate them for their damages.

■ Wishing They Could Return to Work

The branch heads would visit their homes in South Korea for a short time every other weekend. Since they entered the Kaesong Complex in 2008, they spent the majority of their time there.

Jang: When I was leaving, the North Korean guard standing there, who I suppose is probably still standing there, told me, “Mr. Jang, don’t you worry about a thing and have a safe trip. Don’t be gone too long.” Tears came to my eyes. I shook his hand as I left.

At first, we didn’t get along, but as we butted heads we eventually came to understand each other. At first, he didn’t know what watermelons, honey melons, or tangerines were. When I gave him a watermelon, he threw it on the ground. He thought the idea was to smash it in pieces and then throw them in a pot to boil.

Lee: Our factory was just at the point where our productivity was starting to climb. In March, we worked until two in the morning fifteen times. After a late night, we would sleep in the changing room.

While if you just go by the days the factory was operating it may not seem like that many, we worked a ton of hours. We got to work at eight in the morning and worked late, until eight in the evening. When we were busy, we would even keep going until ten in the evening, or two in the morning. Where else do people work like that?

Jang: Our productivity increased to 60% of what we get in South Korea. It used to be 40% but it kept going up.

Lee: It’s been ten days since I left the Kaesong Complex, and I really miss it. I guess it grew on me. I said goodbye to life in the South five or six years ago. Once every two weeks I would visit South Korea to see my family, share a meal with them, and talk with the chairman of the company. After that, I went back to Kaesong. It’s no surprise I don’t have any friends. My life in South Korea ceased to exist.

Jang: I just hope that the Kaesong Complex will be reopened again as soon as possible. That will also help the South Korean economy. There were 800 South Korean employees listed, but if you count our families and our subcontractors, there were thousands of us. All of those people are in a difficult situation. If you add in the sixty Kaesong Complex offices and the businesses that deliver products to those offices, you’re talking a whole lot more people.

■ Asking the Government for Assistance

The companies could not just twiddle their thumbs and wait forever. They have started meeting together, seeking a way to make ends meet and even considering the idea of holding demonstrations.

Jang: Recently, twenty branch heads have been getting together. They are thinking about meeting next week with employees who are about to be kicked out of their houses to file a petition and maybe even have a demonstration. If we all get together, there will probably be 1,000 people. It is even more frustrating because the government has not made any real moves to help.

Park: The companies that were involved in toll manufacturing have suffered worse losses than those with their own brands. We keep complaining about our difficulties. Since we are the ones who know the most about Kaesong, we are planning on expressing our opinion on the subject.

Please direct questions or comments to [english@hani.co.kr]

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