Labor reform gains attention as new National Assembly forms

[Photo by MK DB]

South Korea should speed up labor sector reform, starting with issues the union and management have built a consensus on, according to experts on Wednesday.

“When it comes to reform tasks such as labor reform, securing favorable public opinion is much more important than the number of seats (at the National Assembly),” said Jun Joo-sung, professor emeritus of economics at Ewha Womans University. “Even if it’s a minority party, if it carries the majority opinion on its back, momentum for reform will be generated.”

Jun emphasized that a favorable public opinion should be secured through the process of public discourse, and based on this, achieve political compromises.

Jun’s remarks were made when labor reform issues are back in the spotlight following the legislative election on Wednesday. The 22nd National Assembly is set to convene on May 30.

The Yoon Suk-yeol administration has proposed several measures for labor reform, including flexible working hours, restructuring wage systems based on performance, addressing the dual structure in the labor market, and promoting healthy labor-management relations.

While progress has been made in some areas, such as a notable reduction in the duration of labor disputes from an average of one month to nine days, other proposed reforms have yet to make significant progress.

Regarding flexible working hours, the government‘s attempt to extend working hours in March 2022 fell through amid criticism that the government was encouraging long working hours.

In November, the government proposed extended working hours for certain industries, but the industries that would be subject to such extended working hours were not clearly announced, leaving further details to be discussed between labor and management.

Efforts to improve the dual structure of the labor market have also been limited. Although five shipbuilders, including Samsung Heavy Industries Co. have announced their determination to raise wages for subcontractors and expand contributions to joint welfare funds, doubts remain about actual action in the near future, while the impact of such progressive moves on other industries has remained trivial.

Social dialogue has not been facilitated as the councils to lead such dialogue under the government plan have not been established or their members have not been finalized.

Experts suggest prioritizing issues where consensus between labor and management exists, such as continued employment for the elderly.

Kwon Hyuk, a professor at Pusan National University law school and a key figure in the Yoon administration’s labor policy, emphasizes the importance of continued employment for the elderly as an agenda that enjoys broad support.

There are also recommendations to pursue reforms that do not require multiparty efforts, such as introducing performance-based pay systems in public institutions.

According to the Ministry of Economy and Finance, only 55 institutions have adopted the performance-based pay system out of a total of 130 target institutions as of 2022, accounting for about 42 percent. The finance ministry targets over 100 public institutions to adopt the performance-based pay system this year.

Application of different minimum wages by industry is another key agenda. While legally permissible, this practice has not been implemented for 36 years, despite increasing calls for its adoption, especially with the minimum wage expected to surpass 10,000 won ($7.33) next year.

Cho Kyung-yup of the Federation of Korean Industries suggested restaurants as one area where different minimum wages could be applied.

Seok Byoung-hoon, a professor of economics at Ewha Womans University, advocated restructuring the Minimum Wage Commission, calling for ways to include parties with a real interest in minimum wage issues other than those affiliated with large company unions.