Public workers' strike undermines economic competitiveness

Following a series of strikes by the financial workers' union last Friday, Hyundai Motor's labor union on Monday, the railway and subway workers' union on Tuesday, labor unions of medical workers also walked out on Wednesday. The two major umbrella labor organizations -- the Federation of Korean Trade Unions and the Korean Confederation of Trade Unions -- said they will hold a nation-wide general strike, in which some 180,000 workers will participate. As the affected industries are depending on alternative personnel to fill in for striking workers, we are restless over the situation where any accident could happen. If the strikes go on for a long period of time, hospitals, public transportation systems and logistics will be in chaos. It constitutes a moral paralysis for public service workers receiving their salaries from taxpayers' money to go on strike, taking the public's convenience hostage.

The financial workers and Hyundai Motor employees are among the top 10 percentile of income, while railway, subway and hospital workers are enjoy high levels of job security until they reach the retirement age. Having the most coveted jobs in the country, the workers who go on strike to protest the introduction of performance-based compensation systems do not look legitimate to public eyes. They argue that it is unreasonable for the public services sector to pay differentiated compensations based on job performances. However, they already receive bonuses based on eval‎uations of public organizations' performances. Japan, which also had the seniority-based compensation system like Korea, shifted to performance-based pays while going through the prolonged economic slump in the 1990s. Germany also balances base pays and performance pays. On what ground do they want to adhere to seniority-based compensations?

It is no exaggeration to say that the labor market rigidity led by such hardline labor unions undermine Korea's national competitiveness. A World Economic Forum report released Wednesday ranked Korea at the 26th among 138 countries for the third consecutive year. Although economic fundamentals such as consumer prices, savings, fiscal balance are among the world's best, low efficiency in the labor and financial sectors dragged down Korea's total scores. While the country's infrastructure and macroeconomy were among the top rankers, labor-management cooperation ranked 135th among 138 countries, and the employment and dismissal practices was 113th. Because workers in the top 10 percentile in incomes receive wages exceeding their productivity growth, they leave fewer shares for the other 90-percentile workers and eliminate jobs for younger people.

Lamenting such excessive protection of their own interest, Finance Minister Yoo Il-ho called for strong labor reforms. However, bluffing does not revive the economy. Minister of Employment and Labor Lee Ki-kwon said the government would seek every means possible under the law to respond to the Hyundai Motor union' strike, which has caused 2.7 trillion won (2.5 billion U.S. dollars) in lost production. He suggested that the government would invoke its "emergency arbitration authority" to ban the strike for 30 days if the walkout is believed to wreak havoc on the national economy. The government should stop providing mere lip service and strictly enforce the law to deal with illegal strikes.

허문명논설위원 angelhuh@donga.com