First step toward recovery

The government reopened a tripartite dialogue channel with employers and labor unions for the first time in seven months. Representatives met and agreed on the need for “grand compromise” in order to help revive the economy.

The government, along with new Finance Minister Choi Kyung-hwan compromised first. It offered to set up a public sector council within the tripartite panel, a condition demanded by the Federation of Korean Trade Unions (FKTU). Previously, the Ministry of Finance and Strategy had refused the request, saying the public sector is not an issue it can discuss with the union. But Choi backed down.

Choi has been championing the need for regular dialogue between employers and unions. Problems related to irregular workers must be eased for security in the job market and economic recovery, which depends on cooperation between employers and permanent workers’ unions. Labor issues are at the heart of various economic and social problems facing the country such as economic discrepancies. If employers and workers are not conversing, the government won’t be able to push ahead with its economic policy aimed at rebooting the economy based on income growth and domestic demand.

The business sector has been as unhappy as their employees. Companies have recently been bombarded with issues that are hurting their profit - the court and administrative order to incorporate bonuses and allowances in base salary, reduction in working hours and an extended retirement age. Management changes have undermined corporate profitability that is already weak from the prolonged economic slowdown. The management and unions at Ssangyong Motor and GM Korea have agreed to include annual bonuses in base salary. The union at the largest automaker, Hyundai Motor, is demanding its company do the same and has threatened to go on strike. Hyundai Motor complained that its payment of bonuses cannot be considered fixed and if it caves to the union’s demands, extra labor costs could reach 400 billion won ($390 million) in the first year.

Due to stark differences, the success rate of labor-management bargaining is at its lowest in 16 years. There have been 45 strikes in the first half, tripling from the same period last year. Labor should use the momentum while both the government and management are more eager for talks. Labor issues will become extreme if they aren’t resolved through dialogue. The FKTU returned to talks with the government when its conditions were met. The Korean Confederation of Trade Unions should also join the negotiating table.

JoongAng Ilbo, July 30, Page 30