Korean Trade Unions Protest New Employment Guidelines

The cleavages between labor and the state, and labor and business, in Korea are widening due to government labor reforms perceived as pro-business. The Ministry of Employment and Labor is set to enforce a new set of guidelines, starting January 25, intended to introduce more flexibility into South Korea’s rigid labor market.

The new guidelines will make it easier to hire and fire workers based on performance rather than seniority. Currently, full-time employees are effectively guaranteed employment by law. Pay is also determined by seniority, rather than performance-based.

The Federation of Korean Trade Unions (FKTU), the national trade union center representing the interests of labor, is protesting the guidelines, which were the focus of antagonistic tripartite talks between labor (represented by the FKTU), management, and the government. On December 19, the FKTU announced its decision to boycott the talks and vowed to fight against labor reforms through legal and other means, which may include coordinating with the FKTU’s other major union center, the Korean Confederation of Trade Unions (KCTU).

Of the two labor centers, the KCTU represents the more militant of the two (the FKTU is considered to be more bureaucratic and less likely to take labor actions). An alliance between the two would certainly raise union-government tensions and make further progress on labor reforms difficult.

On November 14, the KCTU led a large-scale protest against labor market reforms near the gates of the presidential Blue House. The protest evolved into violent clashes between police and the more militant protesters. Following the protest, KCTU leader Han Sang-gyun took sanctuary in a Buddhist temple to avoid arrest by police. He eventually turned himself in after police threatened to raid the temple.

Given the rigidities of South Korea’s labor market, some limited reform is necessary. Under current conditions, firms are deterred from hiring employees on a long-term, or “regular” basis, opting instead for sub-contracting or hiring new employees on a short contracts that last but a few years and come with no or significantly reduced benefits; this later category of employment is considered “irregular.”

The latest government data show that among all wage earners, 32.5 percent of the total workforce falls into the irregular category, a record high representing a 0.01 percent increase from 2014 but a 5.1 percent increase from 2002 (the government started collecting data on irregular employment in 2002).

The lack of employment opportunities and working conditions are major concerns for all parties involved in the debate, but there seems to be little consensus as to what represents the best way forward. Unions are distrustful of a government which, to channel Marx, they perceive as being little more than an executive committee for corporate Korea. The government, on the other hand, is concerned about lackluster economic growth and high youth unemployment and wants to implement labor reforms that they think will encourage businesses to hire more people. Business, as always, is concerned about declining profit margins and export competition with China and is weary of increased labor costs.

While we can delineate three distinct spheres of interest and influence, power is not evenly distributed across the field. Business, especially in the so-called neoliberal era, is finding an ally in the state, an entity ever fearful of lower than expected growth rates. And under the conditions of economic insecurity, business is exerting a disproportionate amount of influence over economic discourse. True the world over, there seems to be in South Korea a takeover of economic discourse by business interest. This is the argument of Lee Bon-hyun, a long-time business journalist, who published a short article at the Political Economy Research Centre entitled “The Corporate Takeover of Economic Discourse in Korea” (published January 6). Lee’s argument is that the terms of discourse have been set by and thus heavily favor business. “The voices of labour, reformist civil society groups and small and medium companies are systematically omitted,” he writes.

It isn’t surprising then that labor-capital and labor-government relations are as tense as they are now. While all parties are justified in pursuing their own interest, the problem with not finding shared interest is that policies will be highly reactionary and contentious rather than anticipatory and supported. Reform is needed, but the road likely taken to get there will be a contentious and ultimately unpopular one.