Workers Must Be Market-Friendly

Unemployment is projected to soar as corporate restructuring moves into high gear and economic stagnation sets in. To add to the woes, university graduates are entering the job market in search of their first jobs. All of this contributes to the gloomy forecast that unemployment will rise above 4 percent by early next year with more than 1 million people out of work. Labor disputes also show signs of snowballing as the job market becomes so tight.

From the individual worker''s viewpoint, the whole situation is extremely unfair. Workers had to endure a wage freeze or a pay cut throughout 1998 and 1999, and they were on the point of seeing wages fall to 1997 levels when the nation came under another crisis and pushed the economy to the brink of an abyss once more. This means that workers have to put up with declining real wages, with no hope of a raise, for almost five years.

Korea''s gross national income, denominated in U.S. dollars, still falls short of what it was in 1995. Household income remains either stagnant or has declined, and the chances of finding employment are becoming even more slim. So it is understandable that workers feel a need to resort to action rather than sit back and take the blow without putting up a fight.

But if the labor movement turns violent again and illegal strikes spread, the economy would plunge deeper into the chasm of difficulties and the downturn would be prolonged.

Everyone wants a higher income. We all long for the day when Korea''s per capita income rises to the level of advanced countries. But our productivity has to double for per capita income to do the same. To make that happen, production activities have to generate far greater added values.

This means all of us have to improve our employability, with unskilled workers acquiring skills, and skilled workers, managers, researchers and salespeople increasing their efficiency by being up-to-date in information, knowledge and technology.

But such efforts by workers are not enough by themselves to raise labor productivity. There must also be investment to improve workplaces and the systems they use.

It is extremely important to have a crystal-clear grasp of this reality. In order for our income to rise, the number of high-paying jobs has to grow, which can happen only when the number of companies and investors supplying such jobs increases.

But the labor market has to attain greater flexibility and industrial peace must be established in order for investments from domestic and foreign firms to expand.

While companies enjoy a wide range of choices in selecting the site of their investments, workers do not have as much freedom in choosing where to live.

If the Korean labor market remains rigid and workers are paid wages that are too high compared to their productivity, companies would soon have to close down or leave Korea in search of labor markets with greater wage flexibility.

It is true that the Korean labor market has become more flexible since the financial crisis of 1997. According to data from the Bank of Korea, the ratio of temporary or part-time workers has risen, labor productivity has improved, and unit labor costs are on a downward trend. But these changes alone are insufficient.

Companies are still having a hard time restructuring their businesses. Even the companies in the midst of restructuring continue to pay high wages, and it is a common practice for ownerless organizations, including state enterprises, to spend excessive amounts on wages and overall employee welfare, regardless of their productivity.

We are living in an era of globalization and ever-accelerating progress of information communications technology. Labor market flexibility is the prerequisite for the national economy to attain a competitive edge and benefit from this overriding tide of history. International capital movement among economies is becoming increasingly free and rapid. It shuns countries with a rigid labor market and labor unrest.

A country can enjoy the benefits of a new economy propelled by progress in information technology only when its labor market is flexible.

In the early 1990s, IBM pushed ahead with a massive restructuring and laid off more than half of its 440,000 employees. A considerable number of the people who had left IBM during this corporate restructuring are now reportedly at the helm of the U.S. information industry.

Labor movements have to proceed in a market-friendly direction. Union workers have to arm themselves with knowledge and information and raise their productivity. They also have to give employers freedom to hire and fire employees without fearing labor disputes. Above all, they must refrain from turning labor disputes into ideological struggles and focus the labor movement concretely on workers'' welfare, not on politics.

If they fail in this, the income of Korean workers will not easily rise from its current stagnant level.