Time to Restructure Labor Market
The International Monetary Fund (IMF) urged the South Korean government on November 14 to speed up economic restructuring.
The process has been somewhat delayed due to inevitable resistance, which has been witnessed with regard to labor market reform for less protection of regular workers and commodity market reform for deregulation in terms of investment and market access. The IMF emphasized upon the urgent necessity of more labor market flexibility, too.
Many in the business community say that now is the right time to speed up the restructuring process as the South Korean economy is on a recovery track and a labor market reform during a recession period can exacerbate the recession as seen in the case of that during the 1997 Asian financial crisis.
In the meantime, the IMF adjusted its South Korean economic growth forecast for this year upward to 3.2% while stressing the urgency of restructuring.
“Reaching a higher level of labor market flexibility is one of the most important tasks of the South Korean government now,” said Kim Kyeong-soo, economics professor at Sungkyunkwan University and next head of the Korean Economic Association, adding, “President Moon Jae-in promised to turn part-time jobs into full-time and the promise cannot be kept with the overprotection of full-time workers ongoing.” The professor also advised that less protection of regular workers is a prerequisite for zero discrimination between regular and non-regular workers and now is the opportune time for the restructuring of such sectors as shipbuilding, construction and steel.