Conservative Ruling Party Making Welfare Policy About-face

The ruling party, which suffered a crushing defeat at the recent Seoul Mayoral By-election, has been driven into a corner since it railroaded the KORUS FTA ratification bill. It is now trying to break the deadlock by suggesting a series of aggressive welfare measures, such as a three trillion won increase in the welfare budget for next year, protection for temporary workers and heavier taxation on the rich. Announced on November 28, 2011, the plan for hiring 97,000 of the temporary workers shares the same thread.

Political experts claim the move as a counter-offensive using public welfare. In addition, Seoul City Mayor Park Won-soon’s promise to switch 2,800 municipal workers from temporary to regular status earlier this month was seen as giving impetus to the decision.

As of August 2011, the number of non-regular workers in Korea totaled approximately six million. Including in-house subcontract workers and other types of temps, the ballpark figure rises to 8.3 million, equivalent to some 20% of total voters. The desperate party in power has every reason to try and win them over at any cost with the elections approaching.

Former representative Hong Jun-pyo broached the issue in July as part of his people-oriented approach. A special committee was established in the party policy board, with lawmaker Kim Sung-tae, former Federation of Korean Trade Unions (FKTU) secretary-general, appointed chairman. The committee made a public statement regarding seven action plans for non-regular employee protection on September 9, with the pledge announced on November 28 being a result of this.

Earlier, the stance had stirred some disagreement between the ruling party and administration, with the former claiming discrimination among public officials needs to be rooted out while the latter mentioned the massive financial burden this would entail. Then, the party lost the special election and its leading members began to put pressure on the government, insisting on the necessity of welfare expansion.

The former representative talked to President Lee Myung-bak to get his consent on the issue. There was no reason for the President to say no if allowing for the upper hand it could give until the presidential election scheduled for December. “I found no noticeable difference in opinions between the presidential office and us,” said head of policy board Lee Ju-young. The budget for it is estimated to cost 260 billion won in 2012 alone.

The welfare drive of the right-wing ruling party does not stop there. On November 29, lawmaker Kim Sung-shik submitted a motion concerning the protection of in-house subcontract workers. Though the details are even costlier than the aforementioned plan, the GNP is poised to cling to it, despite the lukewarm response it received from the government. Under the circumstances, the President’s focus on growth and efficiency is giving way to the party’s emphasis on public welfare.

In the meantime, current economic conditions are making such a policy look more attractive than ever. According to research firms, Korea’s economic growth rate is predicted to be around 3% at best for the first half of 2012. The European financial crisis is not going away and stagnation could become ugly, combining itself with the chronic problem of growth without employment. The GNP’s actions are probably a precautionary step against such a scenario.

Such movement is not limited to the public sector, spreading as it has to the private sector. “It will act as an example for private corporations,” said Jo Jae-jung, head of the Labor Market Policy Division at the Employment and Labor Ministry. That is why the business world is feeling some pressure. Nevertheless, no one seems to care about the cost of political logic going against market principles. The regular employment policy consumes tax revenue and state-run enterprises’ operating income, therefore there is no way of increasing expenditure to the level needed.

Furthermore, it is contrary to the incumbent administration’s initiative to reform the public sector. Even some in the Presidential Office are voicing how illogical it is to convert the slightly less than a million temps into full-timers in one swoop in spite of the state-run enterprise advancement the government has pursued. The business community is concerned that the labor market could become more rigid.

Another problem with the policy is the amateurish handling of the details, including the selection of beneficiaries. In Korea, there are a total of 341,000 public-sector temporary workers. The figure of 97,000, according to the GNP, is the maximum possible number that can benefit from the employment status change. However, oo one can tell who in which fields will be given the opportunity, with the number possibly falling after the job analysis processes.