Trends in the Government

1. Korean government announced employment situation and its labor policies

On Sept. 5th, the MOEL announced plans to carry out its employment and labor policy. The MOEL has set major goals such as increasing the number of decent part-time jobs and improving the current long working hours.

First, the MOEL plans to create decent part-time jobs in the public sector. Beginning in 2014, this new plan will allow employees to work 5 hours a day in addition to 8-hour full-time work day. As well, the MOEL plans to establish an ‘Act on the Employment Promotion and Protection of Flexible Part-time Employees’, to protect those workers on a part-time basis.

<Table 1> Major MOEL plans for the 2nd half of 2013

As for decreasing the practice of long working hours, the MOEL submitted a revised draft of the Labor Standards Act which stipulates that work on holidays is to be included in extended work.  According to the revised draft, ‘one week’ is defined as ‘7 days, including the weekend’ and work on holidays will be included in extended work by stages, beginning in 2016.

However, such radical changes in working hours without reflecting the actual business environment could weaken the competitiveness of enterprises. According to the research on car component manufacturers, such a change would lead to a decrease of 10% in production, a 10% increase in operating costs and 9% in wages, while causing an increase in the turnover rate of 5%. These increases in labor and production costs, coupled with a decrease in production and an increased delay in delivery, are the most disturbing.

If the revised bill is passed, enterprises would pay an additional 100% of ordinary wage for holiday work, (50% for holiday work and 50% for extended work). Such an increase of labor costs would pose a heavy financial burden on many enterprises. Regarding the wage premium rate for extended work, the ILO (International Labour Organization) has recommended 25%. In Japan, the premium rate is 25%.

On September 5th, the Korean government announced a plan to convert non-regular workers in the public sector to regular status (open-ended contract) by 2015. By doing so, the government is hoping to encourage private companies to give their non-regular workers regular employment status.

Under the government’s plan, a total of 65,711 public-sector non-regular workers engaged in regular and constant work will be converted to regular-worker status. This action was part of ‘the Employment Improvement Measures for Public-Sector Non-regular Workers’ of 2011, and the government has already improved the employment status of 22,069 non-regular workers in the public sector in 2012.

Along with the employment-status conversion plan, the government has devised detailed measures such as △standard regulations on the management of open-ended contract workers, △guidelines for the conversion of non-regular workers to regular status (open-ended contract), and △measures for job security and better working conditions for administrative accounting workers in schools, etc. The government is expected to encourage private companies to convert non-regular workers to regular status through tight labor inspections regarding discrimination against non-regular workers.

<Table 2> Plan for employment status change

(Units: organizations, persons)

* Workers engaged in temporary or intermittent work, workers who work less than 15 hours a week, the aged, experts, (such as those with a doctoral degree), replacement workers hired to fill vacancies created by leave of absence or dispatch, those engaged in jobs offered under the government’s welfare and unemployment policies, etc.