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Labor Market Conditions Deteriorating in Korea
Breakdown of Talks
Labor Market Conditions Deteriorating in Korea
  • By Cho Jin-young
  • April 9, 2015, 03:00
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The tripartite discussion on labor market restructuring has failed due to different opinions about lesser protection of regular workers. 

Easier dismissal of permanent employees remained as the most hot-button issue until the end of the talks. The government adhered to it, while the labor community was strongly opposed to it, even though it was to be a guideline instead of a law. The latter claimed that the policy for ensuring the flexibility of the labor market would be misused for mass, continual layoffs. 

Under the circumstances, it seems that the government would have to face the criticism that it failed to lead the talks. Some experts are mentioning the necessity of a government-led labor market drive, but the related bills are less likely to be handled in the National Assembly with a broken framework for discussion. “The talks are not over yet, and we will try to reach an agreement by the end of this week,” the government explained. 

Nevertheless, confusion is mounting with wage negotiations about to start in individual companies. At present, only 10 percent of the companies have adopted the wage peak system, while retirement at 60 is being implemented in those having 300 or more employees from next year. This means that their labor costs are sure to snowball. Besides, lawsuits surrounding the scope of the ordinary wage are ongoing,  harming trust between the management and workers. 

The uncertainties are blocking companies from recruiting new employees. The rigidity of the labor market is predicted to widen the gap between regular and non-regular workers and between larger and smaller companies amid the trend of low growth as of late, while exacerbating youth unemployment. 

Furthermore, the failure of the discussion at this time is likely to cause hard-liners in the Federation of Korean Trade Unions to raise their voices. The Korean Confederation of Trade Unions, another organization which did not participate in the talks, said it would go on a general strike on April 24.