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Privileged labor unions take away jobs for young people

Posted April. 02, 2015 07:18,   

한국어

The deadline for negotiations among the representatives of labor, management and the government, which continued for three months to come up with a labor market reform plan, ended on Tuesday. They had additional negotiations until late Wednesday but could not narrow the gap. The labor strongly opposed the ideas of increasing more flexibility to employment and the salary system such as creating guidelines for the general layoff of employees showing poor performance.

A labor market reform is urgent in that the economic structure in the 21st century has changed due to globalization and technological advances. Maintaining the same labor structure used in the industrial era is highly likely to lead to a long-term economic recession. This is why President Park Geun-hye invited the representatives of labor, management and the government in September last year and urged the structural reform of the labor market. Labor, management and the government adopted a basic agreement at the end of last year and promised to come to reach a great compromise until the end of March this year. They, however, failed to agree until the deadline.

Like the German and Dutch governments, the Korean government needs to have negotiations among labor, management and the government in advance. In Germany and the Netherlands, the government took the lead and persuaded labor and management to pull through their labor reform. In addition, some are skeptical about the way that labor, management and the government discuss in a committee given that labor and management severely conflicts each other and Koreans are not familiar with culture of reaching an agreement through discussions.

The union membership rate and the percentage of workers at large companies among total employees stand at 10.3 percent in Korea, respectively. The union members of large companies, which are about 10 percent of total employees in Korea, are paid much more than employees who work at small or mid-size companies and non-regular employees and it is harder to lay them off. It is no exaggeration to say that the privileges and excessive protection of “iron bowl labor unions” are the culprits that made companies leave Korea, instead of making investments and hiring people in Korea. They also led to the decline of jobs for young people and poor compensation of employees at small and mid-size companies and non-regular employees. Even an association of youths and college students in Korea stepped up and said, “Please don’t take all quality jobs and share them with us!”

Even if an agreement is drafted in the negotiations whose deadline is over, it would be practically no different from the breakdown of negotiations without including an increase in flexibility both in employment and the salary scheme. The negotiations among labor, management and the government are only a process to reduce social conflicts. Setting policies for labor reform and passing the bill were in the hands of the government and the National Assembly in the first place. The government should submit a revised bill to the National Assembly and both ruling and opposition parties should start the revision process.

When the government and politicians overlook the distorted labor market structure while fearing the “privileged labor power,” the Korean economy cannot expect another leap forward. They should not miss out the “golden opportunity” for labor market reform this year when there is no big nation-wide election.