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Labor reform talks in stalemate

Sept. 13, 2015 - 18:24 By 옥현주

The prospects for labor market reforms remained grim over the weekend as a trilateral panel continued to lock horns over contentious issues, despite the government’s de facto ultimatum last week that it would push ahead with its own bill even without the committee’s compromise.

As the trilateral committee of labor, business and the government failed to meet a deadline, the authorities and the ruling Saenuri Party pledged to initiate the legislative procedures to press ahead with the market reforms starting next week.


Though the government remains determined, citing the time constraint, it also faces a tough road ahead.

If ironing out the plan, the government and ruling party are expected to face fierce objection from the opposition lawmakers at the National Assembly for taking unilateral action and ignoring its earlier promise that it would respect the panel’s decision.

When Deputy Prime Minister and Finance Minister Choi Kyung-hwan announced the government’s plan to legislate labor reforms on Friday, the parliamentary audit session for the Labor Ministry was put on hold due to resistance from opposition lawmakers.

“The government’s announcement to unilaterally push for legislating the market reforms is an action that ignores the National Assembly,” said Rep. Kim Young-joo of the New Politics Alliance for Democracy and the head of the parliamentary committee for labor issues.

“Without the trilateral agreement, it will be difficult for the bill to pass through the Assembly,” she added.

Amid intensifying pressure, the embattled panel resumed the three-way talks at 6 p.m. on Sunday in an attempt to reach a breakthrough. Kim Dae-hwan, the chairman of the trilateral committee, also offered a mediation draft at Saturday’s meeting to draw a compromise, but the top negotiators from each side failed to bridge their differences.

The labor circle allegedly suggested that the trilateral committee discuss agreeable items first, leaving the disputed agendas to be negotiated in a separate forum later.

But the government maintained that it should map out “clear” administrative guidelines that stipulate the deregulation of dismissals for underperforming workers and companies’ discretion to change company rules without union approval.

The issues have remained focal points in the three-way negotiations, prompting the nation’s largest umbrella union group, the Federation of Korean Trade Unions, to walk out of the talks in protest in April.

Under the current labor laws, companies cannot fire employees without giving a justifiable reason, allowing them to terminate a contract with employees only when they are involved in either corruption or embezzlement.

But such a regulation is too “strict,” which needs to be eased to sharpen companies’ competitiveness and reduce their burden for soaring costs in the face of slowing economy, the government said.

Employers also said that the practice of “overly protecting” workers’ employment in the market leads them to avoid recruiting new employees and instead rely on nonregular workers to maintain their competitiveness.

The laborers, however, argued that the easing of restrictions would only result in undermining their job security, giving businesses a legal basis to fire workers more easily. 

Also high on the agenda has been whether to make it easier for businesses to change employment rules without union content. Currently, employers need a trade union’s agreement when changing company rules.

The plan would lay a groundwork for employers to push for changing the employment contracts or salary system even without union approval, which will give a boost to expanding the government-backed peak wage system in the private sector.

Under the peak wage system, companies pay senior employees reduced salaries after the workers reach a certain age, generally between 55 and 60, in return for extending the retirement age by a few years.

With the official retirement age set to rise by two years to 60 next year, the government has claimed that the revamp in the overall wage system is vital to generating jobs for the young.

But the labor bloc has fiercely opposed the plan, viewing it as a scheme to slash their wages for employers to save on labor costs. 

The talks among management, labor and government came in line with President Park Geun-hye’s campaign for labor market reforms, a top priority on her policy agendas in the second half of this year.

The government has vowed to implement the reforms within this year, even without laborers’ approval, to inject flexibility in what it has called “rigid” labor market.

The increased flexibility in the market is key to spurring the nation’s faltering economy and tackling youth unemployment, the government claimed. 

By Ock Hyun-ju (