[Viewpoint]New labor rule a temporary mess

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[Viewpoint]New labor rule a temporary mess

The irregular worker protection law takes effect July 1. Starting then, employers will have to give regular worker status to temporary and part-time workers after they have worked in their companies for more than two years.
The punishment against the improper hiring of temporary workers will be strengthened.
The law will also prohibit discrimination against irregular workers, according to a guide to the Labor Ministry’s new legislation.
There are only two ways private businesses can respond. One is for them to change their employees’ working conditions the way Shinsegae, a leading retail group, has done: It is converting irregular workers to regular workers on the condition that they agree to the five-day, 40-hour work week without any chance of promotion.
The case of Woori Bank, which converted part-time workers to full-time employees but kept them on a separate track from the regular workers, also follows this pattern.
The other way is to outsource the employees, the E-Land-style solution: Canceling the contracts with their irregular workers and using an outside provider to supply the employees the company needs.
With that goal in mind, shipbuilding industries’ subsidiary companies are deciding to become fully independent businesses and the in-house subcontractors of car makers are turning into fully independent businesses.
Given a choice, most businesses are expected to choose the latter as a solution, except for some big businesses that can afford the financial burden from the former and hope to maintain their social reputation.
Contrary to its intent, the irregular worker protection law will have the reverse effect of increasing employment instability.
Some experts anticipated these bad side effects in advance.
The shorter amount of time companies are allowed to employ temporary or part-time workers, the bigger the inducements companies have to seek outside help.
If the government strengthens the regulations that protect irregular workers, it will create a vicious circle in which companies seek temporary outside help more, while employment instability grows.
It is like pouring fuel on a fire. The more times the labor law is amended, the worse the problems of the labor market will get.
Despite its problems, the irregular worker protection law is about to go into effect.
It is urgent, therefore, to minimize the law’s adverse side effects on the labor market before actions are taken to fundamentally improve the law.
First, the changes in the labor market must be monitored carefully.
We must watch what changes the imposition of a maximum period for the employment of part-time workers or dispatched workers will have, and we have to also watch the effect that limiting the types of businesses that can employ temporary workers will have on the market.
We must also watch whether employers will try to find new techniques to get around the law.
After this monitoring, if the law does not bring about the conversion of irregular workers to regular workers and if there is a sign the market is being hurt, then we must get rid several clauses in the law.
Those restrictions, such as how long part-time workers can be employed and what kind of businesses can be allowed to employ temporary workers, must go. We then must return to the system that bans discrimination against irregular workers.
If the original goals of the law are being met, however, only a few complementary measures will be necessary.
Second, we should learn from similar legislation in other countries.
In the case of Germany, where unemployment increased greatly following a new rigid labor law, there are now clear signs of a structural improvement in its labor market.
For example, there has been an increase in the number of people employed since the country adopted Agenda 2010, a revolutionary proposal for labor law reform.
Former Chancellor Gerhard Schroeder and his left-wing government allowed start-up businesses to employ part-time workers for their first four years. People up to age 52 were exempt from rules regarding part-time employment.
Beside the above measures, the German government has helped businesses increase employment by making the labor laws more flexible.
The right-wing government of Angela Merkel also tried hard to settle the effects of the law in the labor market.
As a result, more than 1 million jobs were created and Germany’s economy maintained a steady growth rate of 2 percent. The so-called “German disease” was being cured.
The German example is completely contrary to what the Korean government has pursued so far, which is to consecutively enact the irregular worker protection law and a law for the protection of workers employed at special businesses.
Finally, we must find out how much the government’s budget will increase as a result of converting 70,000 irregular workers in the public sector to regular workers and whether there will then be a huge desire by job seekers to work in the public sector.
From the labor market, we hear voices saying that irregular workers under the government of former President Kim Dae-jung were poor off, but they are hitting a jackpot under the Roh Moo-hyun government.
That’s because the government’s employment policy lacks consistency and has been managed politically.

*The writer is a professor of economics at Sungkyunkwan University. Translation by the JoongAng Daily staff.

by Cho Joon-mo
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