Not all workers the same as firms exploit new rules

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Not all workers the same as firms exploit new rules

They do the same job during the same hours as regular workers, but for far less pay. Legally, it’s not discriminatory because these employees are classified as non-regular, meaning they have been hired on a temporary basis or on contract. In the efforts to cut costs, companies are now free to adopt a two-tier wage system.
As companies hire non-regular employees to increase the flexibility of the workforce, labor union and politicians have been rallying around these workers’ cause and calling on employers to treat all their workers equally. A contract worker at Hwajin Heavy Industry, who wished to remain anonymous, said there is almost no difference in the type of work done by regular workers and others, but non-regular workers are paid less.
The disparate treatment goes beyond salary. “We often work long hours on holidays, but we don’t get the special allowance that is given out to regular workers,” he says. The use of contract employees became more popular after the Asian economic crisis of 1997-98. In trying to cut their labor costs, many companies laid off regular workers and started to outsource work.
This hiring practice has become more widespread since then. According to government sources, in April 2003, the number of temporary or contract workers was 4.61 million, about 32.6 percent of the total workforce.
Labor unions say the numbers could be as high as 56 percent.
According to the Bank of Korea, Korean companies’ labor costs made up about 12 percent of all expenses in 1997. Last year, that number was 8.9 percent.
Labor costs aren’t the only reason companies are turning to temporary employees. An official with Lotte Department Store said that under the current law, it’s hard to lay off workers, so the company had no choice but to employ short-term workers. About half of the 20,000 employees at Lotte are non-regular workers.
“Department stores are directly linked to the domestic economy,” he said. “When people cut down on consumption, we have to adjust our operations and expenses. Having only permanent workers isn’t an option for us.” said the official.
One sales clerk at a big discount store says that his company asked him and his colleagues to become contract workers, with agreements that can be renewed annually, in order to save on insurance costs. “They told us to take it or leave it,” he said.
Businesses may see the use of temporary workers as a success, but labor unions, unsurprisingly, do not.
“In order to cut labor costs, companies have steadily increased the numbers of non-regular workers. We think that it has hurt the companies’ ability to be competitive in the long term,” said Ju Jin-woo, an official with the Korean Confederation of Trade Unions.
A study by the Korea Labor and Society Institute, based on data compiled by the Korea National Statistical Office last year, also showed that temporary workers were far behind regular workers in receiving basic benefits such as pension plans. Only 24.6 percent of such workers were part of a pension plan, while 26 percent had employment insurance, and just 28.9 percent benefited from a health insurance plan.
Unlike regular workers who have labor unions representing them and providing some protection from layoffs, non-regular workers are often left at the mercy of the employers. A woman only identified as Ms. Lee, who had worked at an elementary school for eight years as a teaching assistant for a science class, recalls how she was fired last year in February, shortly after she had told the school she was pregnant.
Business experts stress that regular and temporary employees need to work together if the latter are to see any improvement in their working conditions.
“I believe that regular workers have to make some sacrifices, while non-regular workers need to understand that there is a limit to what they can ask for,” said Nam Seong-il, a professor of business at Sogang University.
The professor recommended that each company work out the differences between the two employee classes and should gradually move toward a wage system that would pay the same amount of money for the same type of work done.
The labor unions acknowledge that sacrifices would have to be made by regular workers so that both sides can survive in a market-driven economy. “Special bonuses paid out should not only be given to regular workers. Temporary workers should receive them as well,” said Kim Seong-taek, an official with the Korea Trade Unions. The official emphasized that the cooperation of labor unions at the big conglomerates is essential.
Nevertheless, such cooperation is still a long way off. In a survey conducted by the trade unions in March, out of 176 members, 102 representatives said they would find it difficult to participate in activities aimed at reducing the wage gap between regular and non-regular workers.
Widespread cooperation between the two types of workers may not be the norm yet, but it’s happening at some companies.
Last year, Hyundai Motors’ labor union agreed with the management to improve the conditions of the company’s temporary workers. They’re now entitled to receive 60 percent of the wage increase that is given to regular workers. Basic insurance coverage, such as employment insurance, has also been granted.
While the rise of a temporary workforce has benefited companies financially, some experts say intangible assets may have been lost.
“Non-regular workers are less loyal to the company, and that affects the quality of the service, which is gaining in importance every day,” said Lee Byeong-ju, a researcher with the LG Economic Research Institute.
Mr. Lee pointed out that at call centers or workplaces where employees interact with customers directly, the quality of service is more important than in other industries. Hiring more temporary workers could hurt these companies in the long term.
Both companies and their permanent employees won’t be able to ignore the plight of temporary workers indefinitely, given that it’s become such a political hot potato recently. Also, the fate of temporary workers could affect their more secure counterparts more than they realize.
“Regular workers have to make the first move. Everyone has to understand that they are in the same boat,” said Professor Nam.


Better treatment in other nations

Korea is by no means the only developed country increasing its use of non-regular workers. However, the differences in wages and working conditions between the regular and non-regular employees are not as great as they are on the Korean Peninsula.
Other countries seek a more flexible labor market, yet at the same time are strengthening protective measures designed to improve the conditions of non-regular workers.
For instance, in France, part-time workers must receive the same benefits and wages as regular workers, and part-timers must have a written contract that details the working conditions, hours and wages. In addition, part-time workers get first crack at new openings.
In other countries, when a regular worker opts to become a non-regular worker, the same conditions apply. In Europe, people who want to have flexible working hours opt to go part time.
In May 2000, England established a new law that forbids the discrimination between regular workers and part-time workers.
Under the law, part-time employees are eligible for the same wages, vacations, maternity leaves and pensions as regular workers. In addition, when companies must lay off part of their workforces, they cannot use workers’ part-time status as a factor in deciding who goes.
In the mid-1980s, in order to cope with rising unemployment rates, Spain allowed the the use of part-time workers in every sector. However, the move backfired as companies who increasingly had started to employ non-regular workers en masse had to fire them when the economy was sluggish, resulting at times in even more unemployment.
In 1993, the Spanish unemployment rate rose to 24 percent, and in 1997, labor unions, companies and the Spanish government reached an agreement to reduce the number of part-time workers while reducing the compensation to regular workers.


by Special Reporting Team
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