Labor Trends

1. FKTU takes a hard line against the government

Difficulties in restoring the relationship between labor and government seem to have increased for the time being since the newly elected president Mr. Joo-young Kim of the Federation of Korean Trade Unions (FKTU) has pledged* a ‘regime change’, forcing the resignation of anti-labor government officials.

* Mr. Kim also pledged to oppose the introduction of guidelines on fair personnel management, rules of employment and performance-based wage systems, and abolish the MOEL order to correct collective agreements as a way to push ahead abrogation of what he considers anti-labor policies and to support pro-labor candidates in the upcoming presidential election in Korea to effect government change.

Mr. Kim requested the Chairman of the National Assembly to put a halt to the current government’s labor policies and facilitate passage of the Minimum Wage Act (increase a minimum wage to KRW 10,000 or USD 9) as well as the Occupational Safety and Health Act (prohibiting outsourcing of dangerous work). The umbrella union also plans to demand that the next administration settle the current issues raised by the FKTU and consider whether to participate or not in social dialogue such as the Tripartite Commission based on the government’s response.

2. KCTU plans to push for resignation of the government and a complete revision of labor laws, strengthen a fight against conglomerates, and take up labor-management issues in partner firms of large companies

The Korean Confederation of Trade Unions (KCTU) will focus on five demands* for the presidential election in the 1^st half of 2017, go on strike over minimum wage, organize general strikes as concentrated action for wage negotiations and push for complete revision of labor laws in the 2^nd half of 2017.

* The KCTU will struggle against the government to achieve its five demands: reform the conglomerates, completely revise labor laws, abolish the use of non-regular workers, set KRW 10,000 as the minimum wage, and strengthen unions in public sector.

[Table 1] KCTU Action Plans for 2017

As the KCTU’s regular convention on 7 February was adjourned due to conflicts over political polices, a provisional convention will be held later to determine activity plans.

The KCTU will seek to conclude agreements with major presidential candidates to strengthen its demand so that the next administration change laws and systems related to reforming conglomerates. Of particular note is that the KCTU will seek to cooperate with the FKTU during the next administration towards pushing ahead with negotiations with the government and the National Assembly to institute this reform and settle issues at workplaces where disputes have been raised.

The Korean Metal Workers’ Union (KMWU), affiliated with the KCTU, will engage in labor action to put pressure on wage negotiations during collective bargaining in 2018 with companies in Hyundai Motors Group and increase its actions against other conglomerates. The KMWU appears to also be seeking legislation of special laws towards reforming conglomerates and development of the manufacturing sector.

[ Table 2] Bills Proposed by the Korean Metal Workers’ Union

Also, the Korean Confederation of Trade Unions (KCTU) is likely to investigate the status of indirect employment in all workplaces with a view to making it a labor issue at major companies by sector.

Meanwhile, the Korean Metal Workers’ Union (KMWU), affiliated with the KCTU, is focusing on subcontractors in the shipbuilding sector. The KMWU has established affiliated unions in major shipbuilding regions with an eye to unionizing workers in subcontractors: union branch offices for workers in Ulsan subcontractors of Hyundai Heavy Industries, shipbuilding subcontractors in Geoje/Tongyeong/Gosung, and the southwest region of Gwangju (in Yeongam).

3. Ongoing conflict over performance-based wage systems in public institutions

The labor community continues to file suits against the introduction of performance-based wage systems at the public institutions where approvals are made by the boards of directors. As Korean courts grant injunction requests filed by unions against changes to employment rules and presidential candidates also pledge to cancel introduction of these wage systems, the number of suits is expected to increase against applicable public institutions. As of 19 January, 304 public corporations, quasi-government agencies, public institutions and local public enterprises have adopted performance-based wage systems, with 93 deciding to do so with only the approval of their boards of directors. In the midst of this, government plans in 2017 to include extending the scope of these wage systems from the current level 5 directors to all level 5 government employees, which carries the potential of worsening the current labor situation.

4. Excessive union demands for wage hikes will make 2017 a difficult year for wage bargaining

On 15 February, the Federation of Korea Trade Unions (FKTU) decided to demand wage hike of KRW 257,860 (USD 225.30) for 2017 on the basis of monthly aggregate wage amount, which is equivalent to wage increase by 7.6%p for regular workers and 17.1%p for non-regular workers. The monthly aggregate wage is calculated by including the monthly fixed wage and the average monthly value of allowances and bonuses paid during the year.

The FKTU is also looking to block the performance-based wage system from being introduced during collective wage bargaining this year, meaning that wage negotiations are expected to be long and difficult. The nation’s two umbrella unions plan to join forces to see an increase in the minimum wage, which will aggravate industrial relations further.

The two umbrella unions released a joint statement on 15 February and insisted that the Minimum Wage Act be revised during the provisional session of the National Assembly in February, in terms of the criteria for determination of minimum wage (including setting its lower limit) and the method used in appointing public interest representatives to the Minimum Wage Council. The statement also included that they will not participate in the Minimum Wage Council unless the revised Minimum Wage Bill passes the National Assembly.