All walks of life are busy preparing for another decade. However, the National Assembly is stuck with the budget proposals following the last year. Conflicts throughout the legislative process are expected, considering that a general election and a presidential election are scheduled in April and December 2012 each, and 2011 is the last year in which the legislative process can be discussed. The legislation related to industrial relations is no exception. The KEF would like to review 10 issues related to industrial relations legislation, and their effects on companies.
First, the multiple-unions system that will be introduced in July 1st, 2011 and the Time-off System introduced last year are the biggest issues in current industrial relations. The labor community is demanding an increase in the time-off limit.
Concern is rising that employers will be required to grant more paid hours to the trade unions, especially in workplaces with shift operations, if the current law or regulation is changed. There is also a possibility of increased spending on collective bargaining if trade unions at the industry level ask for separate bargaining, since employers cannot possibly refuse the unions’ demand even if several unions exist at the workplace concerned.
Trade unions’ demand for revision of the multiple-unions law has not been officially discussed in the National Assembly, but resetting the maximum number of paid hours is supported by some labor politicians. For this reason, businesses need to work together to prevent possible burdens on companies arising from extension of the time-off limit or increased spending on bargaining. Business is now exerting efforts to minimize the possible chaos in the workplace by operating the multiple-union TF and foreign-invested company counseling centre.
Second, a change in human resource management is expected since the government, as an effort for job creation, is pushing ahead with policies of expanding part-time employment, reducing working hours to give workers more time for childcare, and allowing the Working Hour Savings Account System. Employers’ attention is required since employers’ right to choose may not be fully guaranteed in the legislation process of reducing work hour for childcare, and it is premature to legislate part-time work due to the rigid wage and employment system, and the weak labor market for manpower substitution.
The third issue relates to the law for protection of motherhood, which can be perceived as a measure to increase the nation’s low birthrate, is bringing concern over its potential for increasing burdens on companies at the same time. Strengthening welfare by increasing the maternity leave benefit and introducing paid paternity leave would limit companies’ HRM and deepen the employment insurance deficit.
Fourth, improving regulations regarding subcontract workers, non-regular workers and dispatched workers is getting more attention in terms of diversified HRM. Although the government is working to make rational modifications to the range of sectors for which dispatch of workers is permitted and to the current two-year term of dispatch, labor groups and the opposition parties are expected to oppose these modifications. Particularly, the opponents have proposed a bill to impose the wages and compensation for subcontracted workers on the original contractor companies, while the government plans to draw up guidelines and discuss regulation improvement. Labor market rigidity and greater burdens on companies are expected with such regulations regarding subcontracting, which is not even regulated in advanced countries such as the U.S. or Japan.
Fifth, legislating a retirement age of 60, which labor groups support as a solution to the problem of the aging Korean society, can constitute an obstacle to HRM, considering overprotection for regular workers in the labor market. The Federation of Korean Trade Unions has taken the lead in submitting a bill concerning the retirement age, and the issue is closely observed since the Korea Tripartite Commission is discussing measures for hiring baby boomers.
Other pending bills include legalization of public holidays (which can cause 176 trillion Korean won of economic costs), deeming the following Monday as a public holiday when a public holiday falls on a Sunday, and expanding unemployment benefits (that can harm the employment insurance budget). If these bills are approved, the burdens for companies will be increased. In particular, Korea has 13 statutory holidays per year – 1.8 days more than the average (11.2 days) of six advanced countries (U.S., UK, France, Germany, etc.). The regulations for holidays do not go with global standards and can even weaken companies’ competitiveness.
Companies should also take closer looks at the legal issues related to improvement of the labor practice of long working hours, flexible working hours, and modification of the pension system to ensure better old age income.
Business should deal with these 10 legal issues actively and companies keep their eyes on the development, since the resolutions of the issues could potentially increase companies’ burdens and restrict their HRM. While devoting continuous attention to these issues, companies are called upon to reorganize their HRM systems so as to respond to and prepare for the legal and systemic changes.