1. National Assembly passed a number of labor bills that will increase burden on business
A number of revised labor laws, including the Act on Age Discrimination Prohibition in Employment & Aged Employment Promotion, and the Act on Youth Employment Promotion passed the National Assembly. Revision of the Toxic Chemicals Control Act is expected to be a significant burden on the chemical industry, as it imposes fines of up to 5% of total sales in case of violations.
<Table 1> Labor Bills Passed in the National Assembly in April
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Act
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Main Features
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Act on AgeDiscriminationProhibition in Employment and Aged Employment Promotion
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Ø Extends minimum retirement age to 60 (Default retirement age for every company, whether they extend the age or not)
Ø Companies should take necessary actions, including improvement in their wage system, in case of retirement age extension
Ø Employment subsidy shall be provided if wage system is improved
Ø The Ministry of Employment & Labor shall provide consultations in support of wage system improvement at company level
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Act on Youth Employment Promotion
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Ø Obligate public organizations and local state-run companies to hire young workers (at least 3% of the total number hired each year)
Ø A list of companies failing to meet the youth employment quota to be released to the public
Ø Compliance with youth employment quota will be reflected in management evaluation
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Toxic Chemicals Control Act
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Ø Instead of suspending business for administrative violations, companies shall be fined up to 5% of total sales. As for companies with a single workplace, the fine shall be a maximum of 2.5% of total sales
Ø Violations of subcontractor may also impact the primary contractor but no penalties shall be given to the primary contractor
Ø Injuries or fatalities caused by professional or gross negligence shall be punished by imprisonment of up to 10 years or a fine of up to 200 million KRW ($177,856 USD)
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Act Concerning Registration, Evaluation, etc. of Chemical Substances
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Ø Strengthens obligation to register and report new types of toxic chemical substances
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Occupational Safety & HealthAct
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Ø Obligates primary contractor to provide information on risk of industrial accidents to subcontractors
Ø Issues corrective orders to primary contractors in case of violations of subcontractors
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Employment Insurance Act
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Ø Extends unemployment benefits to the unemployed at the age 65 or over
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Act on the Collection, etc., of Premiums for Employment Insurance & Industrial Accident Compensation Insurance
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Ø Decreases industrial accident compensation insurance premiums for small businesses
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The revised Act on Age Discrimination Prohibition in Employment and Aged Employment Promotion obligates companies to extend retirement age to 60 as of 2016 but fails to include introduction of wage peak system. This is expected to result in conflict between labor and management surrounding introduction of wage peak and performance-based wage systems. As for the employment subsidy, the government originally proposed that it be granted to all workplaces which extended the retirement age, but the legislative subcommittee limited it further to workplaces that have also improved their wage systems.
In response, the 5 major business associations including the KEF announced the business standpoint on the revised laws, including concerns that they will further hamper the business environment.
<Table 2> Business Standpoint on Revised Bills Passed the National Assembly
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Ø Currently discussed laws related to fair trade should reflect business investment and the national economy
Ø Regulations on employment need to be revised in a way to boost youth employment and create jobs for all aged groups
Ø Laws which ignore the present business realities and deepen social polarization should be withdrawn
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