On 13 September, a tripartite agreement was reached on structural reform of the labor market by 4 tripartite representatives – KIM Dae-hwan (Chairman of the Economic and Social Development Commission,), KIM Dong-man (Chairman of the Federation of Korean Trade Unions), BAHK Byong-won (Chairman of the Korea Employers Federation), and LEE Ki-kweon (Minister of Employment and Labor). It took more than one year to conclude this agreement after the Special Committee on Structural Reform of the Labor Market was set up at the ESDC on 19 August last year.
In order to conclude this agreement, the tripartite has been engaged in social dialogue for more than one year. The Special Committee on Structural Reform of the Labor Market was launched under the ESDC on 19 August last year, with the ‘Framework Agreement on Structural Reform of the Labor Market’ reached on 23 December. At that time, it was agreed that three main agenda items would be prioritized for discussion, including resolving the dual structure of the labor market; however, as the Federation of Korean Trade Unions walked out of negotiations on 8 April, 2015, social dialogue was suspended for five months.
The FKTU said this interruption of social dialogue was inevitable due to the wide differences of opinion between the tripartite members on the main agenda items and also insisted that the government and management accept its five main demands including increasing minimum wage, applying the Labor Standards Act to workplaces with fewer than 5 employees, implementing a quota system for youth employment, imposing restrictions against the use of non-regular employment for life/safety-related jobs, and requiring regular employment for regular/continuous jobs.
Then, on 6 August, President Park Geun-hye publicly urged the ESDC to resume tripartite talks on a labor market reform agreement in a nationally-televised speech and the FKTU agreed to resume negotiations with the ESDC on 26 August. After several discussions, an agreement on structural reform of the labor market was finally reached.
In this agreement, the tripartite stressed the urgency of reducing the dual structure of the labor market; providing job security and protection to vulnerable groups such as non-regular workers; reducing the practice of long working hours; removing uncertainties in the labor market; and enhancing efficiency within the labor market. Also, with a view towards achievement of these goals, the tripartite confirmed that the social safety net needs significant improvement, and to this end, they would cooperate with one another with special attention and measures from the government.
[Table 1] Tripartite Agreement on Structural Reform of the Labor Market
|
Classification |
Details |
|
Stimulating employment of the youth |
▲ Use the financial resources saved through wage peak systems towards youth employment ▲ Expand the successful youth employment package ▲ Establish a separate consultative body to create jobs for the youth |
|
Reducing dual structure of labor market |
▲ Share growth between contractor & subcontractors, and large companies & SMEs ▲ Improve laws and systems related to non-regular work (reflect agreement at the National Assembly regular session) ▲ Clarify standards and procedures for labor contract termination |
|
Strengthening social safety net |
▲ Expand coverage of social safety net and improve efficiency ▲ Increase payment period and the amount given in unemployment benefits ▲ Discuss ways to improve the minimum wage determination system (by end of May 2016) |
|
Solving the three key issues |
▲ Clarify definition of ‘ordinary wage’ ▲ Improve laws and systems to shorten working hours ▲ Improve wage systems for smoother implementation of retirement age extension |
|
Building tripartite partnership |
▲Stop unreasonable practices and establish a productive negotiation culture |
With respect to ‘clarification of the standards and procedures for labor contract termination’, the tripartite agreed to create improvement measures through participation of relevant experts, and in the long-term, make the standards and procedures clear and based on law and legal precedent. In relation to wage system reform, the tripartite announced the need to clarify the criteria and procedures for revising collective agreements and rules of employment. In the process, the government promised not to push ahead with revisions on its own and complete full discussion with labor and management.
The government is planning to strengthen its support for companies through subsidies for win-win employment for all generations, and exemptions for participating companies from tax audits. The tripartite also agreed to use the financial resources saved from implementing a wage peak system towards youth employment.
With regard to improving laws and systems of non-regular work, the tripartite decided to develop alternatives through a joint fact-finding survey and consultation with experts, etc. with participation by interested parties. Measures to improve the working hour exemption system will be prepared through another fact-finding survey and tripartite discussion by the end of May 2016.
The Tripartite Agreement is of great significance in that labor, management and government made concessions to achieve a grand bargain. Labor and Employment Minister, Ki-kweon LEE stressed “This Agreement will bring employment security, enhance business competitiveness and give more jobs to young people, and therefore, it serves four ends, considering an increase in direct employment and reduction in the number of non-regular workers”.
The Agreement is positive in terms of laying the foundation for reducing the current rigidity in the labor market. Of more importance is the need to develop and implement concrete measures in the future, considering the Agreement is made as a ‘package’ deal. For this, the tripartite decided to extend the Special Committee on Labor Market Reforms for one more year to discuss follow-up measures.