South Korea workers strike in fresh blow to president

SEOUL (Reuters) - South Korean construction workers joined striking truckers on Monday in the latest blow to new President Lee Myung-bak, whose repeated policy stumbles have seen his popularity plunge after less than four months in office.

Adding to pressure on Lee was the lack of progress in talks overnight Sunday in Washington, although U.S. trade officials said negotiators were set to resume work on Monday. South Korean officials were trying to revise an April agreement on importing U.S. beef that triggered a wave of street protests against Lee’s government.

Criticism of the beef deal, stemming from mad cow disease fears, has mushroomed into a wider attack against pro-business policies that helped give the conservative leader his landslide victory in December’s presidential election and ended a decade of left-of-centre rule in Asia’s fourth-largest economy.

The striking construction workers are pressing for cheaper fuel and higher pay.

The militant Korean Confederation of Trade Unions (KCTU) said it would announce on Tuesday the result of a vote by its more than 600,000 members on strike action over Lee’s privatization and pension reform plans.

Unionized workers at Hyundai Motor Co, South Korea’s top auto maker, voted by a relatively narrow margin to join the KCTU if it does decide on a walkout.

Lee’s multiple missteps since his election win, such as having to withdraw his nominations for some top posts and the beef import debacle, have unleashed a torrent of criticism which has caught the government off-guard. Lee took office in February.

CHILL ECONOMIC WINDS

Lee is expected to ditch a number of top aides and ministers soon and may even face the humiliating prospect of inviting his chief conservative rival to become prime minister to help raise his popularity, which has tumbled to under 20 percent.

The protests have come as a global economic softening and surging inflation have combined to dash Lee’s hopes for six percent economic growth this year, part of his campaign vow to bring South Koreans greater wealth.

Most economists say he will be lucky to even match last year’s five percent rise.

Speaking to Asian and European finance ministers on the resort island of Jeju, Lee warned that the world was facing its biggest economic crisis in 30 years.

“It’s no overstatement to say that the world is faced with the gravest crisis since the oil shock in the 1970s, with oil, food and raw materials prices skyrocketing,” he said.

On Sunday, Finance Minister Kang Man-soo said the government was reviewing its policies in the face of mounting public anger.

But he did not say how far the government might be prepared to water down the sweeping reforms it said it would enact to boost local and foreign investment and make the country of 50 million people better able to compete with neighboring giants Japan and China.

So far, local financial markets have weathered the political storm.

“(The truckers) strike is having little impact on the stock market today. But if it drags on longer -- say two weeks or more -- it will certainly affect sectors that rely heavily on road transport,” said Juhn Chong-kyu, a market analyst at Samsung Securities.

Seoul shares closed higher on Monday with the Korea Composite Stock Price Index up 0.77 percent at 1,760.82 points.

The won also ended higher against the dollar with the government reported to have been selling dollars to prop up the currency and to curb inflation.

The latest round of beef talks between South Korean and U.S. officials ended without agreement but the two sides have said they want more talks.

The negotiations are addressing South Korea’s request to block shipments of U.S. beef from cattle older than 30 months, which are believed to carry a higher risk of mad-cow disease.

“The two sides agreed to cooperate in seeking a mutually satisfactory solution...and noted that more time was needed to come up with practical steps,” South Korea’s trade ministry said in a statement.