(Updates with Hyundai strike plan approved, adds comments)
By Samuel Len and Yoo Choonsik
SEOUL, June 24 (Reuters) - South Korea's trade union movement, flush from winning a delay to a key bank merger, prepared to strike for higher wages at the country's top car maker on Tuesday as the nation braced for a wave of summer discontent.
Members of the 39,000-strong union at Hyundai Motor Co voted for a strike to push for higher wages, a union official told Reuters as counting was still under way. Official results of the voting are due early on Wednesday.
"Clearly it's not welcome from the point of view it will add the headline risk for investment in Korea," said Mike Newton, North Asian economist at HSBC Investment Bank in Hong Kong.
The country's second-largest union umbrella group, the Korean Confederation of Trade Unions, also said about 100,000 workers would down tools for four hours on Wednesday, while 22,000 unionised rail workers are due to strike from Saturday.
Hundreds of subway workers at a number of provincial cities walked off their jobs early on Tuesday after negotiations over demands for more staff and wage increases broke down.
With the economy already on the verge of entering its first recession in five years, more industrial disruption would dismay authorities and investors -- especially as a sovereign rating review by Fitch Ratings is due to begin on Wednesday.
Analysts and fund managers have criticised President Roh Moo-hyun, a former labour lawyer, and his four-month-old government for taking a soft line on labour, arguing it has emboldened unions to demand higher pay and to block structural reforms potentially requiring layoffs.
Roh defended his approach, saying the government was right to intervene at the weekend to resolve a strike by unionised workers over a bank merger.
"The government had no choice but to step in and if the strike had not ended smoothly, the government and the public would have suffered the most damage," Roh was quoted by his spokesman as telling a cabinet meeting.
CAVING IN
Roh's government was involved in a deal at the weekend to delay for at least three years a merger between two banks, caving into a four-day strike by unionised workers at Chohung Bank . The government had earlier called the strike illegal.
Shinhan Financial Group is buying government-run Chohung for $2.8 billion, but now has to allow Chohung to gradually raise the pay of its workers and appoint top management from the inside.
Earlier, threats of a strike by unionised rail workers had led the government to scrap a plan to privatise some railway operations, and truck drivers in the country's largest port city won higher payments and other benefits after a strike.
"A labour policy that's not based on market principles but on political consideration will not be good for the stock market as well as for the macro-economy," said Lee Hae-kyoon, chief investment officer at Samsung Investment Trust Management.
"A labour-friendly policy in Europe had already produced many side effects," said Lee, who heads a team managing some two trillion won ($1.68 billion) of funds mainly in equities.
Seoul's benchmark stock index slid 1.6 percent on Wednesday on fears about the flare-up in labour disputes. Hyundai fell 3.3 percent, extending its losing streak to three days.
Unionised workers at Hyundai, which currently produces 7,800 automobiles per day at its domestic plants, would down tools from late this month or early next month if the strike plan was approved by a majority of union members.
($1=1190.2 Won)