① Major labor issues in the first half of 2014
Government concentrates on job creation and stable labor relations
In the first half of the year, the government has concentrated on: 1. strengthening support for youth employment, k encouraging women to continue their careers, 2. strengthening employment and welfare services, and 3. job creation policies to help achieve a 70% employment rate through a new employment labor system. Due to the escalation of labor inspections of working conditions and occupational safety, the burden on companies has increased. This year, the government is planning to conduct labor inspections concerned with remedying discrimination at 328 companies employing a high number of fixed-term workers. After the Sewol ferry disaster, the Ministry of Employment & Labor (MOEL) and the Public Prosecutors’ Office conducted a joint safety inspection on companies. The Prime Minister’s Office, MOEL, the Ministry of Environment (ME), and the Ministry of Trade, Industry & Energy (MTIE) also continued their labor and occupational safety inspections.
Suspension of tripartite social dialogue and delay of discussion on pending labor issues
Labor-government relations were strained due to the suspension of tripartite social dialogue and anti-government conflict created by labor in the first half of the year. Labor-government relations at the national level worsened after the Korean Confederation of Trade Unions (KCTU) went on a general strike and labor withdrew from the Tripartite Commission and other government commissions. Two national union centers also withdrew from the Tripartite Commission and other government commissions to protest against the government’s raid of the KCTU office as a response to the strike by the Korean Railway Workers’ Union (KRWU). The KCTU declared its action plans against the government, and the Federation of Korean Trade Unions (FKTU) continued its struggle against the government’s normalization plans for the public sector and revision of the Trade Union & Labor Relations Adjustment Act after its 25th electoral convention on 22nd January. Meanwhile, the Subcommittee on the Promotion of Social Dialogue failed to reach agreement on its pending issues due to demands by labor for rapid implementation of working hour reduction and attempts by some politicians to revise labor law based on their biased viewpoints.
Labor-government and labor-management conflicts over normalization of the public sector
The two national union centers formed a joint committee along with politicians and civic groups in protest against the government’s plans to normalize public institutions. The public sector unions of the two national union centers initiated an outdoor rally with Korail, Korea Electric Power Corporation, LH (Korea Land & Housing Corporation) Korea Expressway Corporation and 38 other affiliated public-company unions which the government has targeted for privatization.
During the first half of this year, due to extended labor strife in the public sector and anxiety in labor relations with subcontracting companies, the number of labor disputes and work days lost increased over the same period last year.
[Table 1] Number of Labor Disputes and Work Days Lost
|
2014. 1. 1 ~ 6. 18
|
Same Period
Last year
|
|
|
Number of Labor Disputes
|
40
|
16
|
|
Work Days Lost
|
75,301
|
32,956
|
Labor-management conflict deepens over ordinary wage and extension of retirement age
Labor-management conflicts continued regarding the scope of ordinary wage. After the Supreme Court ruling on ordinary wage last year, related lawsuits have increased and labor has demanded abrogation of the government’s guidance, and expansion of the scope of ordinary wage through a revision of labor law.
Although each company may have different views on the legislation of retirement age at 60, labor costs will certainly increase as a result in all companies. Labor-management conflict is on the rise over extension of the retirement age since a considerable number of unions affiliated with the KCTU are against the wage-peak system, although some companies have already extended retirement age in conjunction with implementing a wage-peak system.
Collective bargaining delayed as labor demands excessive wage increases
Conflicts deepened over wage increases, with changes underway in the labor market, including a restructuring of the wage system, extension of ordinary wage, and reduction of working hours. In addition, unions demanded high wage increases at shipbuilder and car manufacturer workplaces.
[Table 2] Demand for Wage Increases in 2014
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Labor Demands for Wage Hikes
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Business Position
|
|
KMWU: Increase of 8.1% in total wage
KCTU: Increase of KRW 225,000 per month (Approx. 8.8%)
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△ Reasonable wage adjustment rate: no more than 2.3%
△ Change in systems such as ordinary wage
– adjust wages within the increase rate of 2.3%
– freeze wages when the increase rate is higher than 2.3%
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Note: Hyundai Heavy Industries Union: increase basic pay by KRW 132,013 (6.51%), and performance-based bonus of 250% + an increase in additional allowances.
Note: Hyundai Motors Branch Union: increase basic pay by KRW 159,614 (8.16%), with performance-based bonuses equal to 30% of net profit.
Due to issues directly related to labor costs such as adjustment of the scope of ordinary wage and reduction of working hours, progress has been slow in wage negotiations and collective bargaining.
[Figure 1] Progress of Wage Negotiations and Collective Bargaining & Increase in Agreed Wages (as of May 31, 2014)
The progress rate for wage negotiations and collective bargaining is 10.7% and the increase in agreed wages is recorded as 4.4% as of the end of May. Although the agreed wages resulted in an increase of 4.4% in total wages, it is concerning that labor costs (including overtime allowances) seem to have increased more than that of the previous year, considering the increase in ordinary wage.
Meanwhile, the minimum wage in 2015 will increase to KRW 5,580, which is an excessive burden on companies, particularly SMEs, considering the current difficult economic situation.
[Table 3] Minimum Wage over 3 Years
|
Year
|
Minimum Wage
|
Increase over Previous Year
|
|
2013
|
KRW 4,860
|
6.1%
|
|
2014
|
KRW 5,210
|
7.2%
|
|
2015
|
KRW 5,580
|
7.1%
|
② Prospects for industrial relations in the second half of 2014
Government to revive tripartite dialogue and stabilize labor relations
The government is attempting to open deadlocked labor-government relations and revive tripartite dialogue after the cabinet reshuffling. The government is planning to induce labor to come back to the negotiating table at the Korea Tripartite Commission by expanding dialogue with executives, industrial leaders and working-level staff members of the two national union centers. Chances are high that labor and government will reopen dialogue, since the two national union centers are participating in most of the government committees, except for the Tripartite Commission.
The government is also planning to minimize labor-management conflict in the workplace by strengthening its guidance/administration system at the regional labor office level. Strikes, which have a huge influence on people’s daily lives and the national economy, including the medical and construction sectors, will be handled with a firm hand. In particular, the government will keep a close watch on those workplaces where labor conflicts are highly likely, such as the finance, metal, and public sectors, through formation of a Sector Taskforce for its guidance/administration system.
Increased intervention by politicians in individual labor relations
Some politicians seem to wish to increase political intervention in labor relations at individual workplaces through the use of parliamentary inspections during the second half of this year. It is feared that more witnesses will be summoned this year from companies with long-standing labor disputes, under restructuring (financial companies) or labor inspection (large companies and their affiliates).
[Table 4] Witnesses for 7 Subcommittees* of the National Assembly
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Year
|
General Public (A)
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Companies, Associations (B)
|
Ratio (B/A)
|
|
2012
|
224
|
164
|
73.2%
|
|
2013
|
284
|
201
|
70.7%
|
Discussion heating up on revision of labor law and regulations
[Table 5] Major Labor Bills Pending in the National Assembly
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Issues
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Related Acts
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Contents
|
|
Reduction of working hours
|
Labor Standards Act
|
Include holiday work into the calculation of extended work
|
|
Tightening the requirements for managerial dismissal
|
Labor Standards Act
|
Employers should take specific measures to avoid dismissal
|
|
Increasing the primary employer’s responsibility
|
Trade Union & Labor Relations Adjustment Act, Industrial Accident Compensation Insurance Act
|
Scope of employers and employees expanded;
Primary employer’s responsibility for safety increased
|
|
Protection of in-house subcontracted workers
|
Act on Protection of In-house Subcontracted Workers
|
Prohibit discriminatory treatment against in-house subcontracted workers
|
|
Reforming the standards for determining minimum wage
|
Minimum Wage Act
|
Various factors such as the economic growth rate to be considered when minimum wage is determined
|
|
Protecting workers in special types of employment
|
Industrial Accident Compensation/Employment Insurance Acts
|
Coverage of industrial accident compensation and employment insurances expanded
|
In the second half of 2014, conflict by trade unions are expected to intensify in the partner companies of large firms and in the public sector
Starting with a joint strike in July, the Korean Confederation of Trade Unions (KCTU) will kick off its plans for summer struggle for the second half of 2014. The KCTU plans to stage a joint strike on the 22nd of July, in coordination with many unions, including the Korean Metal Workers’ Union, Korean Construction Workers Union, Korean Health and Medical Workers’ Union. In addition, the Korean Metal Workers’ Union will carry out industrial strikes in the third week of August.
[Table 6] KCTU Schedule for Major Strikes in the 2nd half of 2014
|
△ 22 July: KCTU general strike (Korean Metal Workers’ Union, Korean Federation of Construction Industry Trade Unions, Korean Plant Construction Workers Union, Korean Health and Medical Workers’ Union etc.).
△ 26 July: 3rd general strike of the Korean Health and Medical Workers’ Union.
△ 3rd week of August: 2nd general strike of the Korean Metal Workers’ Union.
|
At present, cooperation between the two national union centers for the public sector unions is expected to weaken. However, the number of strikes by individual public sector unions and the Korean Teachers & Education Workers Union (KTU) will increase. Public sector unions are planning to continue their joint strikes in the 2nd half of 2014, but their different views concerning which direction the strikes should take will not be conducive to effective or positive outcomes to the strikes.
* Unions affiliated with the FKTU are planning to build a communication channel with the government, while KCTU affiliates are focusing on strikes against government action towards the KTU and the Korean Government Employees’ Union (KGEU), as well as government plans to privatize public institutions.
Some public sector unions which foresee redundancies are likely to continue their strikes. Trade unions with companies such as LH (Korea Land & Housing Corporation), Korea Electric Power Corporation, Korea Gas Corporation, Korea National Oil Corporation, Korea Resources Corporation etc., which are facing asset or share disposal or privatization, will hold strikes against the National Assembly in late August or early September.
After the KTU lost its case to restore its status from an ‘outsider union’ to a legal union on 19th July, the union decided not to comply with the government’s orders for full-time union officials to return to work, and is now coordinating with the KGEU etc., against the government. It is expected that these conflicts will spread, since the KTU is planning to politicize their issues in solidarity with progressive education superintendents and civic groups.
Highlights on occupational safety and health issues in major manufacturing sectors
Labor is planning to use the Sewol ferry tragedy as a means of reinforcing occupational safety and health laws and regulations, and to enhance related conflict. Labor’s focus will be on the petroleum and chemical product manufacturing sectors, especially those with the possibility of gas or chemical leaks or explosions. The KCTU will initiate strikes against Hyundai Steel, Samsung Electronics, etc., whereas the FKTU will focus on an improvement of the laws and regulations, such as legislating the special act on increased punishment for industrial accident deaths, strengthening the prohibition against contracting for harmful work, and etc.
[Table 7] Labor Demands on Industrial Accident-related Laws
|
Demands
|
Details
|
|
Legislating the special act on increased punishment for industrial accident deaths
|
· Deaths caused by industrial accidents are not considered accidental homicide, but are met with charges of murder to punish employers, government agencies, etc.
|
|
Strengthening the prohibition against contracting for harmful work
|
· Revise laws related to the types of harmful work prohibited as contract work.
▲ Prohibit contract work for plating, smelting, heavy metals, etc.
▲ Prohibit contract work for handling any of the 13 harmful substances mentioned in Article 30 of Enforcement Decree of Occupational Safety & Health Act
|
Internal KCTU conflicts deepen during its elections
The KCTU, which has been electing its leadership through its delegate conventions, is now planning to hold a direct election for the leadership. The election will take place over 3 days, starting 3 December. This direct election for the leadership is likely to raise conflicts related to election administration, such as membership qualification, unfair elections, etc. The KCTU has been attempting to introduce a direct election system since 2009, but the system has been postponed 3 times due to internal issues such as corruption.
The current leadership, (an alliance of the People Democracy (PD) faction and a minority of the National Liberation (NL) faction), is expecting to win the election through the support of chairpersons from major industrial-level trade union confederations. However, the majority of the NL faction and another faction called Effection will attempt to reunite the NL faction, and together with left-wing members, form the new leadership.
After the leadership election, the new leadership is expected to instigate corporation-bashing and arouse labor-friendly public sentiment, the latter of which the leadership will use to try to unite all pro-labor parties before the presidential election in 2016.