In 2012, businesses are likely to face difficulties in industrial relations. Due to the upcoming presidential and general elections, politicians are expected to push many populist policies, something that will burden the business community on issues related to industrial relations.
Keeping a close eye on this situation, the labor community is planning to focus on political activities towards extending their power base in 2012 through their political relationships. Also, given the gloomy economic outlook stemming from the financial insecurity of advanced countries, instability in labor relations may worsen due to the potential restructuring. Businesses need to manage such risk factors if they wish to establish peaceful labor relations.
Increasingly Pro-Labor Policies/Views by Politicians
In 2012, the government and political circles seem more determined to work on pro-labor policies than ever before. Job creation is now the government’s top priority, as is creation of better jobs for young people entering the workforce and strengthening social protections. Some measures, such as reforming the shift system and increased protection for non-regular workers, are expected to increase the burden on businesses.
Politicians are likely to release unnecessary pro-labor measures and pledges regarding maternity benefits, non-regular worker protection and minimum wage. With the KCTU fighting for an increased minimum wage, these measures seem to be a big burden on carrying out business in Korea.
Labor Groups to Become More Political
Recently, labor groups have been seeking alliances with political circles to boost their weakened power, and this tendency is likely to continue well into 2012. Just ahead of presidential and general elections, labor groups are expected to gather their forces to push for resolution of current issues through these alliances.
The Federation of Korea Trade Unions (FKTU) decided to join in with the newly-formed Democratic Unity Party (the Democratic Party and the Citizen’s Unity Party) at a temporary national meeting of delegates on December 8 last year. The FKTU plans to select its leadership at a national convention on January 15, and aims at occupying the seats of the party`s supreme members related to labor issues and acquiring 15% of the rights to recommend for the party delegates and members as well as making up 50% of the National Labor Committee to discuss the labor issues. With this, the FKTU is likely to resolve, in a way favorable to the FKTU, current labor issues like revision of the TULRAA and wages for dispatched full-time union officials; however, the FKTU is facing a potential internal rift over its political activities with the Democratic Unity Party.
The Korean Confederation of Trade Unions (KCTU) is expected to stay politically active through its alliance with the United Progressive Party (the Democratic Labor Party, People‘s Participation Party and Progressive New Party). The Democratic Party and United Progressive Party plan to take more than 20 seats in the upcoming elections, form a floor negotiation group and join the cabinet in the next government with the Democratic Unity Party. The KCTU’s 20 core demands include ▲job creation ▲conversion of non-regular workers to regular workers ▲elimination of discrimination ▲nullification of the KORUS FTA ▲ reform of the Chaebol (nationwide conglomerates) ▲strengthening of social protection ▲shorter working hours, and ▲maintenance of peace on the Korean peninsula.
There is growing concern that solidarity between labor and political groups will cause rapid changes in Korea’s industrial relations. First, an excessive number of vote-buying bills are likely to be proposed regarding non-regular workers, in-house subcontracted workers, and the minimum wage. Labor groups will also continue to demand revision of the TULRAA, specifically regarding the time-off system and the multiple union system.
Second, as labor officials want some important posts in the administration and local governments, labor administration will likely be pro-labor. For example, since a KCTU advocate has been elected as the mayor of Seoul, a KCTU member has been appointed to the secretary for labor policy. Since then, the policy decisions by the Metropolitan City of Seoul have reflected KCTU requests in such things as reinstatement of dismissed Seoul Metro workers, support for the welfare center for non-regular workers and the ombudsman program for labor inspection.
Third, political groups are expected to intervene in labor disputes. In 2011, politicians promised political solutions to the labor disputes at Hanjin Heavy Industry & Construction and Yoosung Enterprise, resulting in many labor issues being distorted by politics. There are concerns that in 2012, political intervention will increase.
Even though labor gets involved in politics, it should not make the labor environment biased towards the side of labor, which may aggravate Korean industrial relations. Labor issues should be dealt with according to economic principles and resolved by autonomous decisions between management and labor directly involved in the issues within the bounds of law and principle. If labor and political groups work to only create a labor-friendly environment, employers and workers will ultimately suffer together.
Businesses should respond to the excessive demands of unions according to principle. Firstly, management should inform their workforce that political activity without permission during working hours is a reason for disciplinary punishment when that activity involves unions demanding paid time-off for political activities. Businesses need to enforce this as well. Secondly, if union demands for company facilities and posting of their notices infringe on company property rights, the employer should file criminal and civil lawsuits for obstruction of work and take disciplinary action according to company rules. Lastly, if unions require deduction of union dues from worker’s wages for political activities, employers should not allow this without each worker’s consent.
Multiple unions and time-off systems at crossroads between success and failure
Despite early concerns, the multiple unions system is making a soft landing. However, it is forecast that labor groups will try to organize more new trade unions in 2012 when elections are scheduled, and the multiple unions system will cause major upheavals. Accordingly, a paradigm shift from adversarial industrial relations to collaborative ones would be delayed.
Although there have been internal changes in activist labor groups from the end of the year 2000, polarization in industrial relations will continue by type of business or workplace over the next 4~5 years.
[Figure 1] Monthly Trend of Trade Union Establishment
Since the introduction of the multiple unions systems in July 2011, 601 new trade unions have been established. Considering the system is not temporary, action against establishment of new trade unions and the ensuing chaos should not loosen up. Now, labor groups will focus on organizing trade unions in the service industry (hospitals, department stores, supermarkets etc.), public sector services, and retail, while they continue to organize trade unions in companies without unions. For this reason, the unionization rate (recorded as 9.8% in 2010) is expected to rise to a certain extent.
[Figure 2] Unionization Rate and Number of Members
For political and influence purposes, labor groups are forecasted to focus on strengthening trade unions at the supra-enterprise level, such as industrial unions. The trend of establishing industrial unions, which was decreasing after the establishment of the Korean Metal Workers and Korea Health and Medical Workers unions, started to accelerate with the establishment of the Korean Public Services and Transportation Workers unions in June 2011, and the Korean Financial Service Workers Union in December 2011.
The Korean Confederation of Trade Unions is planning to reform its structure by promoting establishment of industrial unions. Businesses need to note that the transformation of trade unions from enterprise level to industry level, may lead not only to changes in the structure of bargaining, but also to political agendas in the collective bargaining process, and frequent political struggles. In particular, a mutual-assistance system is required as a countermeasure to the formation of industrial unions since otherwise individual enterprises will have difficulty resolving industrial disputes with increasing outside interference.
Moreover, businesses should exert every effort to see a smooth introduction of the time-off system. The system has been accepted overall, with 95.2% having introduced by November 2011, and its compliance rate of the limit at 99.4%. Despite these figures, caution is necessary before concluding that the system has been fully accepted.
Attempts have been made to preserve wages for full-time union officials by increasing union dues or creation of a standing committee. Indeed, some unions have complied with the time-off limits but are planning to bring payment of full-time union officials back through collective bargaining or additional negotiations during the political jockeying next year.
The year 2012 sees industrial relations at a crossroads between co-prosperity and retrogression. Amidst concerns over the lame-duck status of the current government, labor groups and politicians seem bent on promoting dispute in the workplace. The government should deal with illegal actions in accordance with law and principle, to prevent chaos not only in industrial relations but also in society. Businesses should exert themselves in the creation of peaceful industrial relations in 2012, by dealing with industrial issues in accordance with principle.