Ill-advised Policy Takes Its Toll
The Korean Confederation of Trade Unions (KCTU) goes on a general strike on Nov. 21 over extension of the flexible work hours system and other issues. On the other hand, small-business owners’ complaints are mounting in the wake of the government’s push for 52-hour work week and a double-digit minimum wage increase.
Experts point out that the Korean economy is going nowhere under the government’s ill-advised labor policy. “The general strike will drag down large corporations, which have propped up the South Korean economy through exports,” one of them mentioned, adding, “The government needs to admit its failure and work on alternatives.”
The KCTU is opposed to the government’s plans to extend the flexible work hour system and introduce low-salary jobs in Gwangju City. The government is planning to extend the period for the flexible work hour system in order to offset enterprises’ burden entailed by 52-hour work week and a double-digit minimum wage increase that continued for two years in a row. At the same time, it is planning to create low-salary jobs in Gwangju. The KCTU is regarding these as deterioration of working conditions.
The South Korean government has increased the rigidity of the local labor market by pushing for the conversion of temporary workers to regular employees as well as a steep hike in minimum wage and a 52-hour work week. As a result, enterprises’ cost burden is on the rise, their business conditions are getting worse, and more and more shop owners have been driven out of business. The number of employed persons has increased by less than 100,000 for four months in a row and the growth stood at 5,000 and 3,000 in July and August, respectively. The numbers of self-employed persons without and with one or more employees fell 101,000 and 4,000 in October, respectively.
Under the circumstances, the Bank of Korea and the Korea Development Institute estimated South Korea’s economic growth for next year at 2.7% and 2.6%, much lower than previous estimates. “It seems that the government’s labor-friendly policy has backfired,” said University of Seoul business administration professor Yoon Chang-hyeon, adding, “The labor community is making unreasonable demands on the government.”